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“Sugar at a Second Glance” 


By FRANK C. LOWRY 


Being a Cortiment Upon, Exppsure of and Answer to 
“Sugar at a Glance,” and a Treatment of Our High 
Tariff on Sugar from the Consumers’ Standpoint 











“Sugar at a Second Glance ” 


The Infl uence of Our High Tariff on Sugar Upon the Ultimate 
Price to the Consumer and as Affecting the 
High Cost of Living 


By FRANK C. LOWRY 


“If protection to young industries ivas needed, it has been given. 
The initial stages of trial and unfainiliarity arc certainly passed. 
The industry in the far West has quite passed the infant stage. 
Its difficulties in the fanning region proper seem to he due to 
the competition of the other ki)ids of agriculture, tvhich, under 
the typical American conditions, are more profitable. If this kind 
of agriculture needs protection, and if the familiar grain-grozi'ing, 
cattle-fattening and dairying, of the corn-zuheat belt do not, the 
explanation is still to be found in the principle of comparative 
cost.” — F. IV. TAUSSIG, Professor of Economics, Hanard 
University. 



D. OF D. 
APR 18 1913 


« ♦ 
o . , 

c 

• * 9 

%• 








Mr. Truman G. Palmer—An Appreciation 

For the benefit of the many new members of the House and Senate who may be unacquainted and unin¬ 
formed, we wish to introduce the author of “SUGAR AT A GLANCE,” to account for the appearance of this 
work in the form of a public document and to explain the exact occasion for Mr. Truman G. Palmer’s in¬ 
terest in the subject of sugar. 

To begin with, he is not an expert in the employ of the United States Senate, as might be inferred, “at 
a glance,” from Senate Document No. 890. He merely enjoys the privilege of intimacy with certain retiring 
members of that body, to whom, on pressing occasions, he furnishes information, “disinterested,” but com¬ 
patible with their standpat views, which in appreciation, they cause to be published and circulated as a Public 
Document, (at the government’s expense.) Nor is he wholly committed to the cause of the beet sugar farmers, 
as might be taken for granted from the pronounced bucolic nature of his latest composition. In reality he is 
the Secretary of the United States Beet Sugar Industry, a “voluntary” organization comprehending all of the 
principal beet sugar companies of the United States with headquarters at 901-903 Union Trust Co. Building, 
W'ashington, D. C. This was formerly known as the American Beet Sugar Association and was recruited at 
Washington several years ago by Henry T. Oxnard, the original beet sugar “volunteer” and now Vice-President 
of the American Beet Sugar Co. The name was changed in order to avoid confusion with the company of its 
founder and to obviate the embarrassment of identification with the American Sugar Refining Co., or Trust 
(though all of the beet sugar companies, in which the latter is most heavily interested, are members of this 
“patriotic” society). 

- Mr. Palmer testified before the Hardwick Committee that he had been in the employ of this “voluntary” 
organization since 1902 when, as a beet-sugar land patriot, lie abandoned his fields in the West to appear at 
the Cuban Reciprocity Hearings to present his “DEADLY PARALLEL.” That his earnest but futile endeavors 
attracted the attention of the Washington beet sugar brigade, who then and there employed him to safeguard 
tlieir interests, and, if forced, to resort to authorship again, which he forebore to do until driven to desperation 
by the House Free Sugar Bill. 

That his salary while engrossed at Washington was $10,000 per year, raised by “voluntary” contributions 
from the members of the “volunteer” organization; that he was allowed expenses besides, while engaged in 
special services away from Washington. That he was the only salaried official, though there existed a “volun¬ 
tary” executive Committee, composed of such well-known beet sugar “economists” around Washington (during 
.Sessions) as the before mentioned Henry T. Oxnard, Charles C. Hamlin, Vice-President of the United States 
Sugar & Land Co., a company with a capitalization of $8,000,000, and but one beet-sugar factory at Garden City, 
Kansas, with a daily slicing capacity of 900 tons (factory cost $900,000) and Thomas R. Cutler, Ex-Bishop of 
the Mormon Church, Vice-President of the Utah-Idaho Sugar Co. (in which the Trust owns a half interest). 
That he was employed in a legislative capacity at Washington, principally to present the case of the beet sugar 
interests “from an economic view-point” before Congressional Committees when the Tariff on sugar was under 
consideration; but that he was in no sense a lobbyist. That when not thus preoccupied he found time to attend 
and address the Trans-Mississippi and National Irrigation Congresses, for the purpose of influencing resolu¬ 
tions favoring the fostering of the beet sugar industry, through maintenance of a high Tariff. His testimony 
to this effect may be found between pages 2694 and 2702 of the Hardwick Hearings. 

From the nature of his employment it must become apparent that the “economic view-point” entertained by 
Mr. Palmer is not altogether a disinterested one; but must, of necessity, have special reference to the interests 
of the beet sugar manufacturers and land promoters who seek to have the present “pork-barrel” Tariff main¬ 
tained for their exclusive benefit, at tbe expense of the consumer, without regard to the interest of the beet 
grower. Wdiat other “patriotic” impulse could move this “volunteer” organization to pay such a high price for 
the luxury of Mr. Palmer’s services and publications? 



Introduction 


Knowing that Sugar is too broad a subject to be covered “at a glance,” and that a practical knowledge 
of any special phase of it can only be acquired through circumspect observation, “SUGAR AT A SECOND 
GLANCE” implies a closer scrutiny to the tariff aspects lost sight of in “SUGAR AT A GLANCE,” and it is 
intended to be a comment upon, exposure of, and answer to, this latest “vision” of the Beet Sugar Interests. 

In the explanatory letter, to be found on page 2 of his treatise, the author indulges in this “modest” self¬ 
recommendation : “Having exercised the utmost care in making and checking the various conversions, I feel 
justified in stating that, no substantial error has crept into the work.” \Miile this expresses the self-satisfaction 
of the author, with his effort, we accepted it as merely defining the limits of his knowledge, and pursued our 
independent investigations, with the result of having revealed to us, in chart after chart, and page after page, 
not only where “substantial error had crept into the work,” but also, where willful misrepresentations had been 
attempted. 

In the first place, under the pretentious caption of “National Economy,” and “High Cost of Living,” 
“SUGAR AT A GLANCE” is^a masquerade of the Beet Sugar manufacturer and land promoter, in the guise 
of the beet-sugar “economist,” for the purpose of obscuring and evading the real issue of tariff revision. Their 
disguises and distractions are graphic representations of remote and imaginary “indirect benefits” to accrue, 
primarily, to the farmer, and, eventually, to the public, through encouragement to more extensive cultivation 
of the sugar beet, by maintenance of a high tariff. 

' For themselves, they prefer the more “direct benefits” that accrue from the maintenance of this special 
privilege legislation that enable the factory to buy sugar beets from the farmer on a free trade or low tariff 
basis and sell sugar to the consumer on a high tariff basis. This has, in the past, enabled the beet sugar factories 
to overcapitalize, to pay excessive dividends, amounting, in some cases to 35^ (Michigan Sugar Company) and 
others to 100% (Union Sugar Company) or to accumulate a surplus of $9,000,000 in five years, after paying 
regular yearly dividends on preferred and common stock (a large part of which was, originally, water), a feat 
accomplished by the Great Western Sugar Co. of Colorado. 

Mr. Palmer conveniently abandons any attempt to justify our present high tariff on sugar, from the at¬ 
tractive but elusive theory of “equalizing the cost of production between home and abroad.” The author well 
knows that the present “pork barrel tariff rate” cannot be defended upon that basis; hence, he presents argu¬ 
ments to divert attention from the real question at issue in the hope of leaving in the minds of his readers, the 
impression that any material reduction made in the interest of the consumer Avould spell “ruin” to the domestic 
sugar industry, discriminate against the farmer and indefinitely postpone solution of “The High Cost of Liv¬ 
ing” problem; while he claims acceptance of his doctrines would promote the direct interests of the factory, the 
indirect interests of the farmer, and, eventually, compensate the consumer, by reducing the high cost of living, 
through remote increases in crop yields. Even the familiar appeal “to be given ten years more,” is not touched 
upon. This old-time favorite was first introduced at the Cuban Reciprocity Hearings, appeared again before the 
Payne Committee to ask for an extension of ten years, in order to fulfill the former promise of “production of 
all sugar at home,” but was too feeble or ashamed to present itself at the last hearings before the Senate 
Finance Committee, since ten years of high protection disclosed an increase of only 400,000 Tons in domestic 
beet production, while domestic consumption increased nearly 1,000,000 Tons. All past representations and 
favorites have now given place to this new discovery and panacea for “High Cost of Living” known as “in¬ 
direct benefits.” 

To indulge in a controversy over the indirect agricultural benefits to be derived through cultivation of 
sugar beets, in rotation with other crops, would carry us too far afield, and away from the principal considera¬ 
tion of the effect of our high tariff upon the ultimate price to the consumer. Suffice to observe that these remote, 
“indirect benefits” do not materialize solely because of the planting of the sugar beet, but rather as a conse¬ 
quence of the condition in which the soil is left after employing the necessary intensified “horticultural” 
methods in its cultivation. This may be understood readily from the fact that England neither cultivates nor 
produces any sugar beets, yet by application of the most effective, intensified methods of farming, and use of 
the most productive means in rotation upon her limited agricultural area forces her soils to yield more bushels of 
wheat, rye, barley and oats per acre than do the fields of Germany on which the sugar beet is grown so exten- 



“SUGAR AT A SECOND GLANCE” 


5 


sively. This was effectively pointed out by Senator Williams in his speech on the sugar tariff in answer to 
Senator Lodge’s “review” of Senate Document No. 890. It is highly improbable that England would have 
failed to have experimented with the sugar beet, in her aim to secure the maximum yields, or to have adopted 
their extensive cultivation and use, did they prove either necessarily conducive, or indispensable to, the attain¬ 
ment of this end, as she had the further inducemjnt of originating domestic sugar production; whereas now 
all the sugar she consumes is imported. The comparison of crop yields between the two countries, with the 
advantages in favor of England, where no sugar beets are cultivated, demonstrates that intensified methods of 
farming, and not the use of sugar beets, are responsible for the increase. 

Moreover, we are inclined to question whether the sugar beet is responsible for the increase in crop yields 
of Germany to the extent and in the manner represented by Mr. Palmer. His claim is to the effect that Ger¬ 
many has more than doubled her yields per acre of wheat, rye, barley and oats, solely through a system of 
rotation, one year in four, in connection with fields planted to sugar beets. Such a process would require one- 
fourth of the agricultural area of Germany to be planted in sugar beets annually. This area, according to Mr. 
Palmer's statistics, is 42,776.000 acres, one-fourth of which would be 10,694,200 acres. As a matter of fact 
only one-eighth of this allotted area, or 1,247,213 acres, is planted to sugar beets in Germany, from which is pro- 
tluced an average crop of about 2.500,000 tons. Ilence, the logic of the situation makes us rather skeptical about 
the actual application of the sugar beet in rotation with other crops in the manner assumed by Mr. Palmer, and 
inclines us to the belief that the adoption of more intensified methods of farming during recent years may be 
the more probable cause of these increased yields. 

Furthermore, he apparently overlooks the most important point; and that is, what might be entirely prac¬ 
tical in Germany with an area of 209,000 square miles and a population of 65,000.000 would be most impractical 
in the United States, with an area of 3,025,600 square miles and a population of 94,000,000. 

In order to reap the indirect benefits of the necessary crop rotation system alleged by Mr. Palmer to be 
practised in Germany and to be responsible for the crop increases, it would be necessary to plant to sugar beets, 
annually, one-fourth of the 194,371,000 acres now planted to corn, oats, barley, wheat, rye and potatoes in the 
United States, or 48,592,750 acres, which on the present basis of production of 600,000 tons from 500,000 acres, 
would result in a production of beet sugar in the United States of 58,308,000 tons, or more than three times the 
W'orld’s annual production of sugar, both beet and cane, would require 7,020 more beet sugar factories to be 
erected, and a capitalization (based on the present basis) of the stupendous amount of $13,800,560,000. These 
preliminaries would have to be adju.sted before the farmer could profit from the “indirect benefits,” so allur- 
ingly pictured by Mr. Palmer. 

In twenty-five years we have extended our sugar beet cultivation to 475,000 acres. On the same basis, 
2.500 years would be required to extend it to 48,592,750 acres. We beg to be excused from extending the calcu¬ 
lation further so as to demonstrate the cost to the consumer. We are forced to these extraordinary calcula¬ 
tions by adopting Mr. Palmer’s impractical premises. 

We are prompted to inquire what the effect of the withdrawal of all this land from the cultivation of 
other crops would have on “the high cost of living”? 

Thus it is apparent that so far as area is concerned there is no limitation to what could be done in the 
United States, but this shows how impracticable of application are Mr. Palmer’s suggestions. All of this with¬ 
out reference to the most important fact that sugar beets require a large amount of hand labor as compared with 
other crops, and there are not sufficient field hands for our present agricultural needs. Besides, it is not proposed 
to interfere with the legitimate growth of the beet sugar industry, as we will show later that the farmer does not 
receive the advantages of our high protective Tariff, but is paid no more for his sugar beets, and, if anything, 
less, than the farmer in Germany who works under a low Tariff rate. 

Meanwhile he, in common with other consumers, has been required to pay $130,000,000 more annually 
for his sugar supply, as a result of our high Tariff. 

Again in Chart No. 36, Mr. Palmer makes a comparison between the wheat yields per acre of the State 
of Minnesota and Germany, and shows that Germany raises 127,844,000 bushels of wheat on 4,316,400 acres, 
while Minnesota raises but 67,600,000 bushels on 5,200,000 acres. Now, in order to arrive at a same relative 
yield as that of Germany, one-fourth of the 5,200,000 acres, or 1,300,000 acres in Minnesota, would have to be 
cultivated to sugar beets each year. This is two and three-fifths times the total area now cultivated to sugar 


6 


“SUGAR AT A SECOND GLANCE” 


beets ill the whole United States, and would mean a production in Alinnesota alone of 1,560,000 Tons annually, 
require the erection of 190 beet sugar factories, in addition tc the only one that is now in operation, and a 
capitalization of $360,000,000, in contrast with the present $1 200,000. If the area should be extended to North 
Dakota, Minnesota and Kansas, to bring them up to the average of France, as represented by Mr. Palmer, in 
Chart No. 37, then 4,168,000 acres annually would have to be planted to sugar beets, which would mean a yield 
of 5,004,000 rons of beet sugar annually, would entail an addition of 600 beet sugar factories, where now 
there are only 2 over the whole area, and a capitalization of $1,184,280,000, in contrast to a present invest¬ 
ment of less than $3,000,000. Then again, wliere is all the necessary labor to come from? All of which de¬ 
ductions illustrate the futility and impracticability of Mr. Palmer’s theory and plan for the advancement of agri¬ 
culture, for the purpose of increasing the prosperity of the farmer, and eventually relieving the consumer from 
the burdens of “The High Cost of Living.” 

In order that we may understand exactly the interest of the American farmer in the cultivation of 
sugar beets, let us call attention to the fact that the beet sugar interests claim that, approximately, 100,000 
farmers (there are 10,000,000 farmers in the United States), are engaged in cultivating 474,000 acres devoted 
to sugar beets, making an average per farmer of only 4.74 acres. There are 291,000,000 acres in the United 
States under cultivation in cereals and vegetables. 

. Finally, the average crop yields of Austria-Hungary and France, where sugar beets are cultivated quite as 
extensively as in Germany, are much less than the latter, and in some instances, not much above the average yields 
of the United States. Why should this be the case, if the sugar beet alone is responsible for the increased yields? 

Besides being impracticable, Mr. Palmers’ “economic theories” have not worked out in actual experience. 
He repeatedly claims that, by increasing the area of beet sugar cultivation, the average yields per acre of various 
crops would also be increased, and thus “The High Cost of Living” reduced. Between 1898 and 1911 the area 
cultivated to sugar beets in the United States, increased from 60,000 to 500,000 acres; yet the average yields of 
cereal crops were less in 1911 than in 1898, and the price of all food stuffs has steadily advanced. If such an 
expansion has not tended to solve the vexing problem of “The High Cost of Living,” in accordance with Mr. 
Palmer’s assurances, to what extent would this cultivation have to expand in order to bring about the desired 
relief ? 

“SUGAR AT A GLANCE” is more of a brief for the beet sugar land promotion companies, than it is an 
argument for the beet sugar factories. The reason for this is that the tariff cannot be defended from a factory 
standpoint. A beet sugar factory operates but three months in the year and is of but little value to the work¬ 
ingman. I 

One never hears the contention made that a well-equipped beet sugar factory in the United States could 
not operate as cheaply as anywhere else in the World. The cost of labor does not enter to any extent into 
the factory’s cost of operation. The claim is frequently heard that beet sugar must be very pure because it is 
not touched by a single human hand from the time the beet enters at one side of the factory until refined sugar 
is ready for delivery at the other side. So it is clear that the cost of labor does not play an important part 
in their process of manufacture. You will find in all their statements that the beet sugar men confine their com¬ 
parisons to statements along the following lines; “We must have a high Tariff because we pay our watchman 
two dollars a day and in Germany he receives only fifty cents.” This is immaterial; it is the labor cost'per pound 
of sugar produced that counts, and this is less than 15c per hundred pounds. 

Fuel is an important item, and this, of course, is cheaper in the United States than abroad, particularly 
in our WTstern States, where oil is used. It is a well recognized fact in the manufacturing business that the 
larger the production in a factory the lower the cost per unit, and the factories in the United States average 
considerably larger than those abroad. 

Hence, this attempt to draw away the attention of Congress from consideration of the factory position, 
by graphic, picturesque, descriptions of the promising but inapplicable agricultural side, to all appearances, for 
the exclusive benefit of the farmer, and poor consumer, but, in reality, in the direct interests of the beet sugar 
land speculators, who make use of the tariff to exploit their schemes, and to the indirect profit of the Beet 
Sugar Factories, at an annual expense to the American people of $130,000,000 per year! 

Lastly, “SUGAR AT A GLANCE” is replete with ‘“substantial error,” and actual and quasi misrepresen¬ 
tations. Familiar examples of the former are, the failure to properly represent the Import and Excise taxes of 


“SUGAR AT A SECOND GLANCE” 


7 


the various countries in Chart No. 7, and in Table on Page 63; the failure to estimate the yields per acre of 
wheat, rye, barley and oats, in the United Kingdom, in terms of the equivalent per bushel in Germany; con¬ 
tradictions in the prices alleged to be paid the farmer for his beets between Table on Page 22, and Chart No. 31, 
and variance between these prices and the Government Report; of the latter, the Retail Prices of Europe and 
the United States for July, 1911, represented in Chart No. 8, the attempt to apply deductions based upon the 
Per Capita Consumption in 1901, of 69.7 pounds, to 1910, when the Per Capita Consumption had reached 81.6 
pounds, as in Charts Nos. 6, 7 and 10; computations of the annual cost of the tariff to the consumer in Chart 
No. 7; the cost of production of beet sugar alleged in Table on Page 22; the juggling of statistics and selection 
of special prices within convenient periods for the purpose of “proving anything by statistics,” rather than of 
emphasizing an actual or average condition as in Charts Nos. 10, 18 and 19; combining the Import and Excise 
Taxes, as in Chart No. 7, and Table on Page 63, so as to convey the impression that the sum of the two represents 
the degree of protection accorded abroad, instead of the import duties alone, in contrast with our import rates of 
duty; the failure to make use of the Statistics for the Year 1911, especially with regard to the Average Whole¬ 
sale and Retail Prices in the United States, for Sugar; the approximation of beet sugar company capitaliza¬ 
tion as $71,000,000 for the Year 1909, in Table on Page 22, when it had already reached $130,000,000, and 
failure to state that this capitalization had reached $142,000,000 in 1911, though all sources of information were 
available, as the work itself bears date of July 27th, 1912. 

The purposes of the present volume are to meet remote, speculative theories with practical common 
sense explanations and deductions; to controvert the “various conversions” that have been based upon the “sub¬ 
stantial error” that has “crept into the work,” and expose the evasions and many misrepresentations attempted, 
by facts and statistics, founded upon both experience and authority. Unmasked, “SUGAR AT A GLANCE” 
will appear as an attempt to distract the minds of Congress with a graphic, moving-picture exhibition of remote 
“indirect benefits,” in the hope of deluding them into focusing their attention upon this latest discovery, and of 
drawing it entirely away from the main consideration of the effect of our present high tariff upon the ultimate 
price to 94,000,000 of consumers, so that the beet sugar manufacturers and land promoters may continue to pros¬ 
per and plunder, through maintenance of a high rate of duty, at the expense of the public. In our endeavor 
to expose this latest desperate expedient of the beet sugar interests, we hope to impress Congress with the ad¬ 
vantages to be derived from “a second glance” at the subject of sugar, especially from a legislative standpoint. 
If the question of revision of the sugar schedule is approached in this deliberate frame of mind, we have no 
fears of the ultimate decision to be reached between the merits of the high tariff, as depicted in “SUGAR AT A 
GLANCE,” and the removal of the duties, or a reduction in rates, so that they will not exceed J 4 c per pound 
on 96° raw sugar (equivalent to 20% ad valorem), as revealed in “SUGAR AT A SECOND GLANCE.” 


Analysis of Charts and Data Presented by Mr. Truman 
G. Palmer in “Sugar at a Glance.” 

This Work Is Intended To Be Read in Connection With, So as To Be Compared With, “Sugar at a 

Glance”—The Charts and Subjects Referred to Are Contained in That Volume—They Are 
Designated by Number and Page in This W^ork, So as to Correspond W^ith the 
Number and Page in “Sugar at a Glance.” 

CHART No. I (Page 17). 

Statistics are given in metric tons instead of in long tons, contrary to the custom of the trade; and figures 
are given for 1910-11, instead of 1911-12, though the latter were available since this work bears date of July, 
1912. The Chart merely emphasizes how fortunate is the United States in its sources of cane-sugar supply as 
distinguished from other large nations. 

Hawaii, Porto Rico and the Philippines are referred to as ‘‘insular United States,” while Cuba is classed 
as “foreign.” Bringing this up to date, we find that the United States is not dependent upon “foreign coun¬ 
tries for its supply of sugar, in the general acceptance of this term. 

The consumption of sugar in the United States for 1912, according to Messrs. Willett & Gray, was 3.504r 
iB>2 long tons. The estimates for the following crops in 1912-13 are: 

Cuba . 2,328,000 long tons 

Domestic Beet . 625,000 long tons 

Hawaiian Islands . 500,000 long tons 

Louisiana (1912) . 160,000 long tons 

Philippine Islands . 200,000 long tons 

Porto Rico . 340P3C) long tons 

Texas . 10,000 long tons 


Total. 4,163,000 long tons 

By which it will be seen that the production of sugar inside our tarifif wall now fully equals consumption. All 
of these producers have the advantage of the full height of our tarifif wall, with the exception of Culia, which 
is inside this wall to the extent of the 20% reduction, as a result of the reciprocity treaty of 1903. This island, 
adjacent to our shores, with interests so closely allied with those of the United States, has been favorably 
equipped by nature for the economical production of sugar, and is able and willing to supply the United States 
with this sugar at a low cost, if it were not for the high tarifif which enhances the price. 

CHART No. 2 (Page 17). 

This forcibly illustrates how little the United States is dependent upon beet sugar, as compared with 
cane, for the year in question 462,500 tons of beet sugar being consumed, as compared with 2,851,000 tons of 
cane; and shows how utterly hopeless would be the situation and how high the price were its consumers de¬ 
pendent upon beet-sugar production in the United States. 

A comparative argument is therefore presented for a lowering of the duty in the interests of the con¬ 
sumers. 

CHART No. 3 (Page 17). 

Has little relevancy to the situation in the United States. Here we are mainly dependent upon cane- 
sugar, the ratio in 1910, the year adopted, being seven pounds of cane to one of beet. Hence a world com¬ 
parison of the production of cane and beet sugar has little relation to the United States. The production of beet 
sugar is fostered where they are wholly dependent upon this source of supply, and cane is not available and its 
consumption confined to these countries unfortunately isolated from cane supply. Hence the relative production 
of the two kinds is entirely immaterial, so far as throwing any light upon conditions in the United States is 
concerned. 

CHART No. 4 (Page 18). 

Again based on Metric tons instead of long tons, for the purpose of afifording a proper comparison with 
actual conditions in the United States. This again forcibly illustrates how favorably situated is the United 
States for obtaining cane-sugar supplies both from its insular possessions and from Cuba, which is dependent 
upon us for a market. These are the supplies that the beet-sugar interests have always been anxious that Con¬ 
gress should discriminate against for their special benefit. 











••SUGAR AT A SECOND GLANCE" 


9 


In the past we have seen the fights which the domestic interests have made at various times against the 
free admission of sugar from Porto Rico, Hawaii and the Philippines and the 20% concession made to Cuba. 
As someone remarked when the Free Sugar Bill was passed by the House and the cry went up from the do¬ 
mestic industry that •‘ruination stared them in the face," ‘‘we thought it zvas ruined.” "W'e understood it was 
ruined when in 1898 Porto Rico sugars were admitted free of duty, and again when Hawaii sugars were ad¬ 
mitted free and again in 1903 when the 20% concession was made on imports from Cuba, and again in 1909 
when Philippine sugars were admitted free up to 300,000 tons annually." 

In spite of these dire predictions, there has been a steady increase in the beet-sugar production in this 
country, and factory profits have been very high, in some cases dividends of 100% having been declared. Other 
companies are now paying dividends on an enormous amount of watered stock represen<^ing “capitalization of 
the tarifif." 

CHART No. 5 (Page 18). ) 

In order to make as good a showing as possible, Mr. Palmer now resorts to short tons in illustrating the 
growth of the beet-sugar industry in the United States. 

As an indication of what this means, let us point out that the domestic beet production in 1911 was 
506,825 long tons, but this grows to 606,000 short tons under Mr. Palmer’s method of treatment. Let us also 
point out that in spite of the very heavy tarifif subsidy enjoyed by the beet-sugar industry its growth has fallen 
far short of equalling the increase in consumption. For our figures, we will adopt long tons, the basis of esti¬ 
mate employed by Willett & Gray: 


Beet Sugar 
Consumption. Production. 

1898 . 2,002,902 tons 32,471 tons 

1911 . 3.351,391 tons 506,825 tons 


Increase in consumption.1,348,489 tons 

Increase beet sugar production. 474,354 tons 

Let us now estimate what the maintenance of the beet-sugar industry, up to a point where it supplies us 
Avith 15.51% of our total requirements, has cost the American ])eople. On page 13 we show that since 1903 when 
the Cuban reciprocity treaty went into efifect the refiners’ wholesale price has been increased, by reason of the 
duty, 1.603c per pound. Previous to that date the increase was greater, and it is clear that if the wholesale price 
is enhanced to this extent, the retail price is increased by a greater amount; nevertheless, let us accept this figure, 
which can be regarded as a minimum, and we find that from 1898 to 1911 the price of sugar to consumers has 
been increased $1,368,774,292, and the total value of the domestic beet-sugar, produced during this period was 
$431,962,749. 

We might add that the revenue derived by the Government during this period from the tax on imported 
sugars amounted to $747,776,094. 

CHART No. 6 (Page 19.) 

Although Mr. Palmer does not see fit to give the figures, statistics appear to show that sugar prices in 
the United States have reached a point where they begin to pinch, as the per capita consumption is not showing 
the increase that it should. 

According to Messrs. Willett & Gray, Sugar Statisticians, the per capita consumption in 1909 was 81.8 : 
1910, 81.6; 1911, 79.2, and 1912', 81.3. For the six years previous (1903 to 1908 inclusive) the average in¬ 
crease in consumption was 3.80 lbs. 

A further reference to the figures for the per capita consumption in the United States forcibly illustrates 
the advantages to the consumers resulting from free trade on sugar. For example, in 1891, when the price of 
sugar declined in one week i^c per pound, as a resuU of the removal of the duty on sugar, consumption for 
that year increased 22.96% over the preceding year. An increase of 20% in our present consumption would be 
700,836 tons. Consider what this increased business would mean to dealers, both wholesale and retail, canners, 
preservers, manufacturers, transportation companies, warehouses, etc.; in fact all those who handle sugar in any 
way. 

Mr. Palmer’s figures serve to illustrate that the consumption of sugar is almost universally governed by 
the price and that the per capita consumption of a nation is in proportion to the alternate price in thickly 





10 


••SUGAR AT A SECOND GLANCE” 


populated districts. For example, in Spain and Italy the per capita consumption is very low, owing to the 
internal taxes, and other conditions imposed. While in the United Kingdom, where all sugar is imported, and 
a duty of 40c per hundred pounds assessed with no internal revenue taxes imposed, the per capita consumption 
is relatively the highest, being 92 pounds. When the Unijcd Kingdom admitted sugar free the per capita consump¬ 
tion just prior to the Boer War was 110 pounds. England imports her fruits and sugar and supplied the world 
with preserves, jellies, etc. The relatively high price of sugar in the United States operates to prevent its more 
general use in the manufacture of fruits and preserves of all kinds, and by adding to the cost of these articles, 
limits their consumption. 

While this is the greatest fruit growing country in the world, our exports of jams, jellies, etc., are com¬ 
paratively small, as we cannot compete in neutral markets with countries like Great Britain, which has the 
advantage of cheap sugar. The removal of the tariff would greatly increase the consumption of these articles 
in many cases and canners would be able to purchase and preserve fruits that are now being wasted for lack 
of a market. 

Mr. Palmer is guilty of “substantial error" in representing the per capita consumption of sugar in the 
United States for the year 1910 to be 79.2 pounds. According to Willett & Gray the authority recognized and 
followed by the Government, it was 81.6. 

Mr. Palmer’s statement that, of the per ca})ita consumption of sugar in the United States for 1910, only 
53.7 pounds were consumed directly by the individual and the balance of 25.5 pounds indirectly in products of 
manufacture, constitutes a most wilful misrepresentation. 

The Eighteenth Annual Report of the Commissioner of Labor for the year 1903, under the heading of 
“Cost of Living and Retail Prices of Food,” contains a computation on page 647 based upon statistics gathered 
in 1901 regarding the amount of sugar consumed by 2,567 families scattered throughout the United States, 
zvhosc average size zvas 5.31 persons and zvhosc highest income zoas $891.82, and lozvest $715.46. The average 
amount consumed annually by such a family was found to be 268.5 pounds. For the sake of convenience Mr. 
Palmer assumes the average size to be five instead of 5.31 persons, and by dividing 268.5 pounds, the amount 
consumed by the entire family, by five, the assumed average size, he arrives at his magic figure of 53.7 pounds, 
as the amount of direct consumption. Having made this discovery in this manner, he assumes that it is to be 
the same for all time to come and attempts to apply it to the year 1910. 

Now the per capita consumption in the United States in 1901 was 69.7 pounds and had reached 81.6 
pounds in 1910. If 53.7 pounds, or 77%, went into direct consumption in 1901, then but 16 pounds, or but 
23%, remained for indirect consumption. Applying the same percentage basis to 1910 we find that the direct 
consumption would be 62.83 pounds, instead of 53.7, and the indirect 18.77 pounds, instead of 25.5 pounds, 
and the amount consumed by a family of five persons 314.15 pounds, instead of 268.5 pounds. But these esti¬ 
mates of direct and indirect consumption for either 1901 or 1910 are necessarily unsatisfactory and incon¬ 
clusive, inasmuch as they are confined to families of t^'.e most moderate means and exclude the well-to-do and 
wealthy families who consume relatively more directly. 

W'e wish to call particular attention to the insidrous nature of this misrepresentation as it is applied fre¬ 
quently throughout the volume and forms the very keystone in the construction of all Mr. Palmer’s calculations 
regarding the unimportance of the annual cost of the tfrifif to the consumer. 

It even misled no less a personage than the keen and circumspect Senator Lodge, who accepted this 
basis as conclusive in estimating the annual cost of th.e tariff to the consumer in his memorable speech on the 
sugar tariff, though he makes the following surprising assurance in connection with the acceptance of this basis. 
“Thus taking the figures of the Bureau of Labor as correct, and my ozvn personal investigation made before I 
knezv them, condrins the official statistics.” In the light of the actual statistics as quoted by the Bureau of 
Labor and the application made of them by Mr. Palmer, we are curious about the nature of the “personal 
investigation” conducted by the Senator chat resulted in “confirmation” of such obviously erroneous deductions. 

As an example of the extremes to which the advocates of a high tariff will strain in order to minimize 
the importance of the cost of the tariff' to the consumer, wish to call further attention to the testimony of 
Fred R. Hathaway, Secretary of the Michigan Sugar Company, at the last hearings on the Sugar Schedule 
before the Senate Finance Committee. lie testified that of the 81 pounds of our annual per capita consumption 
of sugar but 30 pounds went iuto direct consumption ar.d the balance of 51 pounds into indirect, in such products 


“SUGAR AT A SECOND GLANCE” 


II 


of manufacture as condensed milk, crackers, confectionery and chewing gum, and cited statistics attempting to 
account for the use of the entire 51 pounds in these products of manufacture. While working towards the 
same end, these two notable “authorities” seem to be very much apart. According to Mr. Hathaway’s figures^ 
assimilated to Mr. Palmer's methods of calculating the annual cost of the tariff to the consumer on the basis 
o* 53-7 pounds per capita and a tariff" cost of 1.346c per pound, the tariff would cost the individual 17.33c less 
per annum than nothing at all, as the total cost would be but 41c, of which 58.33c w'ould be the amount paid 
out in revenue, in accordance with Mr, Palmer’s calculations in Chart No. 7. For the future we suggest that 
two such celebrated “authorities” should compare notes so as to be more in accord in presenting the merits 
of their common cause. Mr. Hathaway’s testimony will be found at page 675 of the printed volume of these 
hearings. 

But all of such calculations and deductions only serve to emphasize the futility of trying to separate the 
direct from the indirect consumption or estimate the relative cost of each. As the beet sugar factories do not 
make any distinction between the individual and the trade in carrying on their business, conducting their sales, 
in estimating their average price and year’s profits, why should any be attempted with the design of obscuring 
the actual cost of the tariff" to the consumer? After all it is not the form in which sugar is consumed, but 
the amount consumed, that controls in this later respect. So when our annual per capita consumption of sugar 
is 81.6 pounds and the annual cost of the tariff is i.6oc per pound, the total annual cost to the consumer in 
revenue to the Government and tribute paid to the domestic and tariff-favored sugar interests is $1.30 and to 
a family of five amounts to $6.50, instead of 13.95c, or 69.75c to a family of five in accordance with the calcu¬ 
lations of IMr. Palmer in Chart No. 7, and amounts in pounds per family to 408 instead of 268.5. 

Mr. Palmer seems to concede that there might be some impropriety in taxing the consumer for the benefit 
of the beet-sugar industry, but contends that none of the manufacturing industries in the United States should 
complain because they are forced to pay tribute to the beet sugar industry through the high price they must pay 
for their sugar and are thus badly handicapped. We do not agree with this theory that other industries should 
be handicapped for the special benefit of the beet-sugar industry. 

Furthermore, Mr. Palmer’s claim that the reduction in the price of sugar, resulting from a reduction in 
the tariff, would not be reflected in the price to consumers of articles in which sugar is consumed indirectly, is 
erroneous. While this might be true of a slight reduction of the duty, it could not be true if a material reduction 
were made, because it is impossible to cut manufacturers’ first cost without competition entering into the situ¬ 
ation and taking care of a reduction in the price of the finished product. We do not have to resort to theory 
on this point, and will cpiote a letter received from a manufacturer of condensed milk, reading as follows: 


Philadelphia, Pa., November 27, 1912. 

Mr. F. C. Lowry, Sec’y, 

138 Front St., New York City. 

Dear Sir: Replying to yours of Nov. 26th, we beg to advise that approximately 17 pounds of refined 
sugar enters into the manufacture of an average case of condensed milk. This, figured at i^c per pound, 
increases the cost of condensed milk per case by 27^c. There are 48 cans to a case, and the cost to the manu¬ 
facturer is therefore increased by more than one-half cent per can, This one-half cent could be saved to con¬ 
sumers were the sugar duty abolished Yours very truly, 

HIRES CONDENSED MILK CO. 

H. C. Hooks, Secretary. 

Inquiries were also made among the candy manufacturers and it was found that those wdio handled bulk 
candies were in favor of free sugar, or a material reduction in the present rate of duty, while those who handled 
package goods were not so keen for it. This was not easily comprehensible at first, but when questioned further 
the package goods men said in substance: 

“Well, our industry is at present standardized. Y'e have certain sizes of packages recognized all 
through the industry, we will say, to sell for 5 cents or 10 cents each. If you reduce the price of sugar 
we will have to give a larger package for 5 cents or give our present five-cent package for less money, 
d'hat would mean a reorganization of our business and a lot of trouble.” 


12 


“SUGAR AT A SECOND GLANCE” 


Thus you will readily see that the consumer would get all the benefit from a reduction in the duty on 

sugar. 

On this point, we would like to refer to the testimony of Mr. Willett, of Willett & Gray, before the 
Hardwick Committee (pages 3554 and 3547). 

Mr. Willett: “I would like to have the Committee satisfied that any reduction of duty goes to the 
consumer and any addition of duty is paid by the consumer in any year under any duty which differs 
from any other duty, making necessary allowances for market fluctuations affected by su})ply and demand." 

and on page 3547 we find this statement; 

Mr. Willett: “All the analyses of changing from duty to free sugar show that whenever duty 
taken off the cost of refining decreases and when the duty is added the cost of refining increases, but 
these analyses also show that whenever duty is taken off the consumer gets the full benefit of the amount 
of duty taken off and also a part of the lower cost of refining, and whenever the duty is increased the 
refiners bear a certain portion of the increase and the consumer does not pay the full addition of the duty.’ 

Mr. Willett further made some calculations to prove the correctness of his statements. 

CHART No. 7. 

This presents a striking example of the desire of the beneficiaries of the present high tariff' on sugar to 
mislead the public, in order that they may continue to reap, at the expense of the consumer, the benefits of this 
special-privilege legislation. 

The import duties and e.xcise tax, or internal revenue tax, are lumped together instead of given sepa¬ 
rately. This is for the purpose of conveying the impression that the total of the two taxes represents the degree 
of protection accorded to the beet sugar industry abroad, and by such subterfuges attempt to prove that sugar 
in the United States is neither subjected to a heavy tax nor is accorded an unusually amount of protection. 
This is not a fact. The import duties, prevailing in Germany, France, Belgium and Austria, the largest beet- 
sugar producing countries in the world, according to the terms of the Brussels Convention, are 52c per hundred 
pounds on refined and 47c per hundred pounds on raw sugar, and these duties represent the extent of pro¬ 
tection accorded that industry. This is in contrast to an import and protective duty in the United States of $1.90 
per hundred pounds upon refined sugar, $1,685 imported 96° raw sugar and $1,348 upon Cuban raw sugar 

of 96° test, in the United States, where no internal revenue taxes on sugar are in effect. In Europe both the 
imported and domestic sugars must respond to the payment of the e.xcise tax, which is assessed in addition to 
the import duty, as mentioned above. 

So as to make this point clear, we will take Germany as an example. Mr. Palmer has compared the 
total tax on refined sugar, $2.03 per hundred pounds, with the protective rate in the United States upon refined 
sugar of $1.90. Refined sugar entering Germany is required to pay a duty of 53c per hundred pounds. (This 
is the protective rate.) In addition it is required to pay $1.50 per hundred pounds internal revenue tax, mak¬ 
ing the total tax paid before going into consumption $2.03 per hundred pounds. But this is not the protective 
rate, as all the sugar, produced in Germany, before going into consumption must also pay this internal revenue 
tax of $1.50 per hundred pounds, so as to contribute to the public revenue. It is therefore apparent that the 
protective rate is represented only by the difference between the two taxes. 


German tax on imported sugars. . . . $2.03 per lOO lbs. 
German tax on domestic sugars. . . . 1.50 per 100 lbs. 


Diff’erence, or protective rate. .53 per 100 lbs. 

in contrast to $1.90 in the United States. 


Similar conditions exist in other European countries, the import tax showing little or no variation, with 
the exception of Russia, Spain and Italy, the difference being in the internal revenue taxes, which run as high 
as $3.50 per hundred pounds in Austria-Hungary. 

It will be noted that our beet sugar factories now have about 3^ times as much protection as those of 
Germany, France and Austria-Hungary, the largest beet-sugar producing countries in the world, outside of 




“SUGAR AT A SECOND GLANCE” • 


13 


Russia. The domestic beet-sugar producers make much of the fact that at one time the countries of Europe 
gave a direct bounty to beet-sugar manufacturers. In the old days when this was done the bounty only amounted 
to 25.9c per hundred pounds in Germany, 13.7c in France and 20.3 in Austria, so it will be seen that if, in 
addition to the protective tariff the European countries were still giving direct bounties similar to the above, 
the total subsidy, direct and indirect, would be less than half that now granted by the United States. 

With reference to the note appearing on page 20, quoting from the Finance Committee’s Report (Re¬ 
publican), on the House Free Sugar Bill, let us point out that this calculation on saving to consumers is based 
on false assumption. In the first place, they assume an individual consumption of 53.7 pounds and are pleased 
to take for granted that the saving to the consumer would only be this amount multiplied by 1.34c, the alleged 
average rate of duty paid in 1911 on importations of raw sugar. The amount of revenue collected from sugar 
in 1911 was $52,496,559. If we multiply the amount of duty paying imported sugar, to wit, 1,608,318 long tons, 
by 1.34c per pound, the alleged average rate, we get about four and a quarter million dollars less than the 
amount actually collected on sugar during that year, which proves that the assumption is intrinsically wrong. 
There is no such rate, as an “average rate of 1.34c per pound.” The minimum rate of duty in the United 
States is on importations of sugar from Cuba and is 1.348c per pound for 96° test raw sugar, which is the 
standard basis of test. 

We can find out exactly the extent to which refiners’ prices have been advanced, as a result of the tariff. 

In recognition of our moral obligations to Cuba, a reciprocity agreement with that island was concluded 
on December 28, 1903, by which in return for concessions made to our imports we agreed to allow the entry 
of Cuban sugar at 20% under the full tariff rates, or upon the basis of 1.348c per pound for 96° test raw sugar. 

This was done for the purpose of stimulating in Cuba the development of their principal product by 
affording a certain market and thus assisting her towards the establishment of a settled form of Government 
founded upon a sound financial basis. Any intention of lowering the price to the American consumer was not 
involved. 

Since this reciprocity agreement, however, an inij)ression has been spread abroad by opponents of tariff 
reduction that the real basis of protection to be considered is now the Cuban rate of 1.348c instead of the full 
rate of 1.685c per pound on raw sugar, or'1.900 on refined. What gives rise to this supposition is the fact that 
almost all of the duty paying raw sugars which comprise half of our importations come from Cuba and since 
they are allowed to enter upon the basis of 1.348c per pound they must be sold at a lower duty paid price than 
the in bond price of foreign sugar, plus the full duty. Let us show how this does not necessarily follow. 

Taking the record of the Department of Commerce and Labor, Bureau of Statistics, No. 240, page 517, 
it shows that the average cost per pound, free on board in foreign countries of the raw sugar imported 1905- 
1911, inclusive, was 2.378c per pound. To this we must add the freight to get the average cost laid down at 
United States ports, .14c, making the in bond price at United States ports 2.518c. During these seven years 
the margin between the price paid by refiners for their raw material, and the selling price on refined was .859c 
per pound. If refiners did not have to pay any duty and added this margin to the in bond price of the raw 
material, 2.518c per pound, it would have made their average selling price for these seven years 3.377c per 
pound. Willet & Gray show that the average New York refiner’s price for these years was 4.98c, or an increase 
bv the tariff of 1.603c per pound, for which the tariff' is alone responsible. 

The following is Mr. Palmer's method of arriving at “The Gross Annual Saving,” “The Annual Loss in 
Revenue” and “The Net Annual Gain,” Per Capita, in this Chart. The direct per capita consumption of sugar 
is assumed to be 53.7 pounds, (though on page 51 it is assumed to be 59.92 pounds). Then the average cost 
to the consumer, by reason of the Tariff, is assumed to be 1.346c per pound, which is lower even than the very 

lowest rate collected upon our imports of sugar, namely, the Cuban Rate of 1.348c per pound. Then this 53.7 

pounds is multiplied by 1.346c in order to arrive at the total cost to the consumer, which results in 72.28c. But, 
from this, the amount collected in revenue is to be deducted, so Mr. Palmer divides $52,445,000, the amount 
of revenue collected on sugar in 1910, by 90,000,000, the total population of the United States, though 53.7 

pounds represents only 68% of the total per capita consumption, and ascertains, by this manner of division, 

that the revenue collected costs the consumer 58.33c per annum, which he deducts from 72.28c, thus leaving a 
net annual cost to the consumer of only 13.95c, by reason of the Tariff on sugar. 

Now, this method is faulty and subject to criticism in many respects, but, principally, because the cost of 
the Tariff to the consumer annually is more than double the amount collected in revenue, because less than one- 


14 


"SUGAR AT A SECOND GLANCE” 


half of tlie sugar we consume pays any duty and the domestic and tariff-favored interests, inside our Tariff' 
WAll, take advantage of the duty levied upon the imported half to increase their price to the full extent of the 
amount levied upon the duty-paying imported sugars. Hence, even upon Mr. Palmer’s method of calculation, 
the cost to the consumer should be twice the amount assessed against the consumer for revenue or $1.17, plus 
the 13.95c, which would amount to $1.31 in all, instead of 72.28c, which amount corresponds v.dth our views 
regarding the Annual Cost of the Tariff' to the Consumer. 

CHART No. 8 (Page 21). 

The purpose of this comparison of Mr. Palmer’s is doubtless to convey the impression that the producer 
in the United States receives less for his product than the producer abroad. If this is true, then it is apparent 
that the producer in the United States needs no protection from his foreign competitor. But Mr. Palmer knows 
that this is not a fact, and so in a concluding note he refers to an internal revenue tax (that increases the price) 
of one to eight cents a pound which is levied abroad, both on domestic and imported sugar. 

I'his is the tax he failed to mention when compiling Chart No. 7, where he attempted to show that the 
protection aff'orded to the industry in the United States, as compared with other countries, was not particularly 
Ijigh. We are, however, glad to see that Mr. Palmer now considers that the protective tariff abroad is "sufficiently 
large to protect the domestic sugar from competition with tropical sugar.” This is in accord with our ideas. The 
writer recommended a tariff of 60c a hundred on raw sugar of 96° test in contrast to the present "pork-barrel” 
rate of $1,685 hundred. In other words our recommendation was nearly 29% higher than the rate of 47c 
charged by the countries of Europe, the protective rate that Mr. Palmer terms "sufficiently large.” 

In order to raise sufficient revenue to support a large standing army and other expenses that do not fall 
on the Government of the United States, European governments have seen fit to require their producers to pay 
a heavy internal revenue tax on sugar. This, of course, advances the price to the consumer to the extent of the 
tax, which for example is in Germany 1.51c per pound, Austria 3.50c per pound, and France 2.53c per pound. 

And so if we are to compare the position of the domestic producer in the United States with the domestic 
producer in these foreign countries the internal revenue tax should first be deducted from the price at which sugar 
is sold. If this is done we find that in July, 1911, the retail price abroad was the following. 

Retail Price 


City. 

Retail Price 
July, 1911. 

Less Exci 
Excise Tax. Tax. 

Berlin 

4.90c 

1.51C 

3 - 39 ^^ 

Magdeburg 

4.90c 

1.51C 

3 - 39 C 

Paris 

5.90c 

2 - 53 C 

3 - 37 C 

Marseilles 

6. IOC 

2 - 53 C 

3 - 57 C. 


while the retail price in the United States where the domestic producers did not have to pay any internal revenue 
taxes was fully 6.35c based on the average refiner’s quotation in New York for July of 5.35c. 

The theory of the domestic producer in the United States seems to be that if consumers are getting their 
sugar at as low a price as consumers in Europe they should not complain—even if it is true that the high 
price abroad is due to taxes levied and collected by the Government, whereas in the United States the high 
price is due to the tax levied only on the imported half of our sugar by the Government, but collected by the 
domestic producer, or tariff-favored interests, on the balance. In other words, when the internal revenue tax is 
placed on sugar in Europe the Government receives all the benefit. When a high import tax is placed on sugar 
in the United States the Government derives revenue only from that half of the sugar we consume that is 
imported and the domestic producer profits to the same extent on the half of our consumption that is produced 
inside our tariff wall. 

Now let us see how Mr. Palmer’s figures misrepresented the situation abroad: 

These prices purport to be taken from "Quotations gathered by the State Department from American Con- 
-suls in Europe.” We herewith submit the exact list of prices so gathered, in order to show not only that some 
of these prices are incorrectly quoted, but also that the prices of the various countries are misrepresented, and 
that, with few exceptions, the very highest quoted are adopted for the European countries, and the very lowest. 
New York, for the United States. Also, that the price of loaf sugar is quoted in some instances, instead of gran- 


“SUGAR AT A SECOND GLANCE 


15 


iilated, to be compared with refined granulated in the Un’ted States wh.ere loaf sugar sells yic to 2c per pound 
above granulated. 

STATEMENT SHOWING THE COMPARATIVE RETAIL PRICES OE SUGAR PER POUND IN EOR- 

EIGN COUNTRIES, JULY, 1911. 

(Compiled by the P>ureau of Trade Relations, Department of State, from Consular Reports.) 


Countries 
(and Cities) 

Great Britain 

London . 

Liverpool . 

Manchester. 

Leeds . 

Glasgow . 

Dublin . 

Germany 

Berlin . 

Hamburg. 

Magdeburg . 

Nuremburg. 

Cologne . 

Erankfort on the Main 

Breslau . 

France 

Paris . 

Marseilles . 

Bordeaux . 

Nantes . 

Lyons . 

Roubaix . 

Italy 

Rome . 

Naples . 

Genoa . 

Venice . 

Milan . 

Austria-Hungary 

Vienna . 

Budapest. 

Carlsbad . 

Prague . 

Trieste . 

Russia 

Moscow . 

Odessa . 

Riga . 

Warsaw . 

Switzerland 

Geneva . 

Zurich . 

St. Gall . 

Berne . 




1911 

Description of grades of sir 

Cents 

prices apply. 

, 4.0 

Granulated 

4.0 

Granulated 

■ 3-8 

Granulated 

. 4.1 

English Cane (Granulated) 

45 

Granulated 

. 4-1 

Crystals (Tate’s twos, etc.) 

■ 4-9 

Fine Soft Wdiite, 2nd equality 

• 5-9 

Granulated (refined) 

. 4.9 

Granulated (refined) 

• 50 

Crystal Powdered 

• 4-7 

Grade in general use 

• 5 -^ 

Loaf (Brode) 

• 5-2 

Refined I coarse grain 

• 5-9 

No. 3 Wdiite Crystallized 

6.1 

No. 3 White Crystallized 

. 6.8 

No. 3 White Crystallized 

• 5-9 

Loaf 

■ 6.5 

Granulated 

, 6.6 

Granulated 

14.0 

Centrifugal (refined) 

. 14.0 

Centrifugal (refined) 

. .14.5 

Centrifugal (refined) 

• 14-5 

Refined 

. 11.7 

Refined 

. 6.5 

Crystal 

. 6.8 

Granulated 

. 8.4 

Granulated 

• 7-3 

Cones (refined) 

. 8.9 

Squares and Cubes 

. 8.3 

Refined in Loaves 

. 7.4 

Refined in Loaves 

. 8.6 

Loaf 

. 7.2 

White Crystal 

■ 44 

Pounded Refined 

• 5-1 

Loaf Granulated 

• 4-9 

Best M’hite 

. 4.2 

Loaf in Sacks 







































i6 


-SUGAR AT A SECOND GLANCE” 


The Netheiiands 

Rotterdam . 

Amsterdam. 

Belgium 

Brussels . 

Antwerp . 

Liege . 

Denmark 

Copenhagen . 

Sweden 

Stockholm. 

Gothenburg . 

Norway 

Christiana . 

Bergen . 

Spain 

Valencia . 

Madrid . 

Malaga . 

Jerez de la Frontera 

Seville . 

T urkey 

Constantinople . . . . , 
Romania 

Bucharest. 

Greece 

Athens . 

Patrias . 

Servia 

Belgrade . 


8.2 

8.7 


54 

7.0 

4.8 

50 

8.0 

7-7 


6.3 

6-3 

8.7 

12.2 

94 

11.9 

10.5 

5-1 

lO.I 

11.4 

12.3 


Refined 

White Refined Superior 

Refined in grains 
White powdered 
Crystallized in bags 

White Granulated 

Refined Granulated 
White Household Granulated 

Granulated glebe white 
Granulated glebe white 


Refined lump 
Loaf 

Refined white cane blocks 
Cane Loaf 
Cut Loaf 

Trieste Square Sugar 

Loaf and Granulated 

Austrian Lump 
A I Fine White 

Grade in general use 


In contrast the average retail price for July in the United States was not less than 6.35c per pound. 

Dififerences in grades make comparisons difficult, but from the above list of prices it will be seen that 
the retail price of sugar is 3.8c per lb. in Manchester, 4c per lb. in both London and Liverpool, 4.1c per lb. in 
Dublin and Leeds and only 4.5c per lb. in Glasgow. These constitute all the cities quoted in the above list. At 
no place in the United Kingdom was the retail price of granulated sugar as high as 5c per lb. as represented by 
Mr. Palmer; the average retail price for all six places being but 4.08c per lb. 


The price for Germany is represented to be 5.9c per pound. This is the quotation for Flamburg, the very 
highest reported out of seven cities in Germany. Berlin and Magdeburg were each a cent a pound below this 
quotation, namely, 4.9c, and Cologne 4.7c per pound. The Average Retail Price of all German cities was 5.14c 
per lb. as compared with 5.9c per pound, represented hc-ve. d'he Retail price for Switzerland is represented to 
be 5.IC per pound, which is the price quoted for loaf sugar at Zurich and is the very highest reported out of four 
cities, Geneva being’q.qc per pound, and Berne, 4.2c, with an Average Retail Price for Switzerland of 4.65c per 
pound, despite two quotations for loaf sugar. In the United States, loaf sugar is quoted 34 to 2c per pound above 
granulated and in Europe the price for loaf above granulated varies from 34 to of a cent per pound. The 
Retail Price for the Netherlands is given as 8.7c per pound, this being the Amsterdam quotation, while Rotterdam 
is 8.2c per pound, showing an average for the Netherlands of 8.45c per pound instead of 8.7c per pound. The 
retail price for Belgium is represented to be 5.4c per lb. Brussels, while Liege is 4.8c, the quotation of Antwerp 
being for powdered sugar which is more expensive than granulated. The price for Sweden is represented to be 8c 
per lb., this being the Stockholm quotation, while Gothenberg is 7.7c per pound. The price for Spain is repre¬ 
sented to be 12.2c per pound, this being the extreme price for that country at Madrid, Valencia being 8.7c per 
pound, Malaga 9.4c per pound, while the other two cities quoted are lower than Madrid. The Retail Price for 
the United States is alleged to be 5.7c per pound. This is arrived at by assuming that the New York Wholesale 
Price for July, 1911, was 4.90c per pound, to which was to be added .79c per pound ascertained as the average 






















“SUGAR AT A SECOND GLANCE” 


17 

cost of distribution in New York between 1890 and 1907 by the Bureau of Labor. Now the period between the 
last day of June and the first day of October in 1911 was an abnormal one in the history of the sugar trade. 
The New York Wholesale Price for granulated started at 5c per pound on June 29, and reached 5.65c per 
pound by July 31st. The average for the whole month was 5.35c per pound. To this it is customary to add 
fully one cent per pound to allow for cost of distribution including Wholesalers and Retailers profits, in order to 
arrive at an Average Retail Price for the whole of the United States. If we follow out this method the Retail 
Price for the month of July, 1911, would be 6.35c per pound instead of 5.69c per pound as represented here. In 
contrast to an allowance of .79 per pound for cost of distribution in arriving at the representative retail price for the 
whole United States in this Chart, in Chart No. 24 Mr. Palmer makes an allowance of .875c per pound, and in 
Chart No. 13 he admits to a New York Wholesale Price for granulated of 5c per pound on June 29th, 5.10c per 
pound on July 6th, and 5.45c per pound on July 27th, 1911, but he now chooses to assume a price of 4.90c per 
pound for July, 1911, in arriving at this alleged Retail Price of 5.7c per pound for the whole United States dur¬ 
ing July, 1911. 

It is only by selecting these very highest prices and including such countries as Italy where the Retail 
Price is 14c per pound of which 8.67c represents taxes, Spain 12.20c per pound of which 7c represents taxes, 
Greece 11.04c of which 7.90c is taxes, Portugal 10.3c of which 7.26c is taxes, and Bulgaria lo.ic of which 6.56c 
is taxes that he arrives at his average retail price for all Europe 7.8c per pound and alleges an average for the 
^le United States 5.69c per pound. Now the only fair way to arrive at a proper comparison is to deduct the 
coUi hied taxes of these various countries from the Retail Price and then compare the result with the average 
American Price less i.6oc per pound, the amount by which it is increased by reason of the tarifif according to 
our calculations or by 1.34c per pound, the amount claimed by Mr. Palmer that the American price is increased 
by reason of the tarifif. By such a method of comparison we would have an American Average Retail Price for 
July, 1911, of 4.75c per pound in accordance with our contention and 5.01c per pound in accordance with Mr. 
Palmer’s view, to compare with the following European retail prices: 

EUR(JPEAN AND AMERICAN RETAIL PRICES FOR SUGAR DURING JULY, 1911. 




Import and Internal 

Retail Price 


Retail Price 

Revenue Taxes 

Less Taxes 


Per Pound. 

Levied Per Pound. 

Levied Per Pound. 

London . 


.40c 

3.60c 

Liverpool . 


.40c 

3.60c 

Manchester. 


.40c 

3.40c 

Berlin . 


2.03c 

2.87c 

Hamburg . 

. 5 - 90 C 

2.03c 

3.87c 

Magdeburg. 


2.03c 

2.87c 

Cologne . 

. 4 -70c 

2.03c 

2.67c 

Paris . 

. 5 - 90 C 

2.89c 

3.01C 

Marseilles . 

.6. IOC 

2.89c 

3.21C 

Bordeaux . 

. 6.80c 

00 

3.91C 

Lyons . 

. 6.50c 

2.89c 

3.61c 

Rome . 

.14.00c 

8.67c 

5 - 33 C 

Vienna. 

.6.50c 

4.02c 

2.48c 

Budapest. 

.6.80c 

4.02 c 

2.78c 

Geneva . 

. 44 c 

.79c 

3.61c 

Zurich—(Loaf) . 

. 510C 

.79c 

4 - 3 IC 

Berne . 

.4.20c 

.79c 

34IC 

Rotterdam .. 

.8.20c 

4.92c 

3.28c 

Amsterdam. 

00 

0 

0 

4.92c 

3.78c 

Brussels . 

. 5 40c 

2.27c 

3 -I 3 C 

Liege . 

.4.80c 

2.27c 

2.53c 

Copenhagen . 

. 5-Ooc 

I.7IC 

3.29c 

Madrid fLoaf) . 

.12.20c 

7 c 

5.20c 

Stockholm . 

. 8 c 

3.70c 

4.30c 

Gothenberg . 

. 7-7 c 

3.70c 

4 c 



























i8 


“SUGAR AT A SECOND GLANCE” 


Constantinople (Loaf). 5.1 c .25c 4-85^ 

Lisbon .10.3 c 740c 2.90c 

Athens (Loaf) .114 c 7 - 9 ^^ 2.50c 

Bucharest .lo.i c 6.56c 3 - 45 ^ 

Belgrade .8.7 c 5-26c 3 - 44 c 

Christiana .6.3 c 2.43c 3-^7^ 

Sofia (Loaf) . 7-2 c 4-69^ 2.51c 

United States.6.35c i.6oc (Lowry) 4.75c 

United States.6.35c 1.34c (Palmer) 5.01c 

United States.6.35c i-44c (^^illett) 4-9^^ 


Of course the deductions made for the United States do not apply to domestic sugar. 

By such a method of comparison it appears that the Retail Price in the United States, despite the 
advantage it possesses of abundant sources of cane and beet-sugar supplies, was the highest of any place in 
the world except Rome and Madrid, where sugar is regarded as a luxury and where the general use of it 
is almost prohibitive on account of the price and Avhere the per capita consumption is lower than any other 
country in the world. 

These prices were based upon the Retail Prices of granulated sugar abroad, and Mr. Palmer's deduc¬ 
tions are based solely upon quotations for granulated. Hence, a discussion about loaf sugar in connection 
with such comparisons is entirely beside the question. 

CHART No. 9 (Page 22 ). 

According to \\'illett & Gray, the per capita cons.nnption in 1890 was 54.56 lbs. instead of 50.7 lbs. as 
represented in this Chart, and in 1900. 66.6 lbs. instead of 58.9 lbs., and in 1910. 81.6 lbs. instead of 79.9 lbs., as 
here represented. 

In 1891 it was 67.46 lbs. This was the first year of free raw sugar and shows an increase of 22.96% over 
1890, the year that Mr. Palmer selected for his purposes. Seven years later, in 1898. it had dropped to 60.3 
lbs. during which year the eftect of the present tariff rates began to be felt. In 1899 61 lbs. In 1894 it 

was 66.64 lbs.; 1895, 64.23 lbs., the eflPect of the rate fixed in the M’ilson bill of 40% advalorem was then be¬ 
ginning to be reflected in the consumption. This was more noticeable in 1896 when the per capita consumption 
had fallen to 60.9 lbs. In 1897, the year the present rates went into eftect, the annual per capita consumption 
was 63.5 lbs., which in 1898 had dropped to 60.3 lbs. Ah of these figures illustrate to what extent the consump¬ 
tion of sugar is effected by the tariff. As a matter of fact the per capita consumption in 1900 was .86 of a 
pound less than in 1891. when the period of free raw sugar went into effect, thus showing that an increase in 
consumption during a period of nine years was altogether negatived by increases in the tariff. 

Mr. Palmer did not make use of the reliable figures of M’illett & Gray, though they were available, and 
are the authority in the United States. He was also careful to select convenient periods so as to show contrasts 
that would support his argument without taking into consideration the various tariff changes. 

CHART No. 10 (Page 22). 

W’e call your attention to the fact that the prices quoted are not the prices consumers pay for their 
sugar. They are the New York Y'holesale Prices as quoted by Refiners. As the New York Price now is the 
lowest price of anywhere in the Lhiited States, and has been for the last 25 years, to arrive at an average price 
to the consumer fully one cent per pound would have to be added to this figure. The periods of 1870 and 1880 
are too remote to afford any correct basis of comparison with prices of the present dav. Those prices were 
largely governed by tariff conditions and supply and demand. 

Mr. Palmer selects convenient ten-year periods in order to mislead. Now in 1890 there was a duty of 
2.24c per pound upon 96° test raw sugars, which was entirely eliminated in 1891. Hence the price in 1890 was 
affected to the extent of 2.24c per pound by the duty. To illustrate the effect of the removal of the tariff the 
wholesale price in 1891 declined i^c per pound in one week. As the effects of the removal 
became apparent the price dropped to 4.346c per pound in 1892. 4.12c in 1894 and 4.15c in 1895 as 
the immediate result of the removal of the duty. The price in 1900 selected for comparison is the very highest 












"SUCAR AT A SECOND GLANCE” 


19 


in the 20 years’ period between 1890 and 1910 and is only exceeded by the average wholesale New York price 
for the year 1911 which was 5 345c per pound which Mr. Palmer was careful not to mention though the data was 
available, for fear he might upset his argument and charts. Now the average price for the 20 years between 
1891 and 1910, inclusive, was 4.718c {)er pound, which shows that in 1910 the cost of sugar was 28c per 100 lbs. 
above the average price for 20 years and rather explodes the claim for reduction due to domestic production. We 
print herewith the New York Wholesale prices for Granulated Sugar from 1891 to 1911, inclusive, showing that 
the price in 1911 was the highest during that period and that the price used by Mr. Palmer for his purposes of 
comparison in order to illustrate a reduction, was the highest during that 20-year period with the exception of 
1900, 1901 5 - 05 ^'. 1905 5-256c, and 1911 5.345c. The following are the New York Wholesale Prices: 1891 

4.641c, 18924.346c, 1893 4.842c. 18944.12c, 1895 4-I52C, 1896 4.532c, 1897 4.503c, 1898 4.965c, 1899 4-9^9‘''- 1900 
5.32c, 1901 5.05c, 1902 4-455^'- 1903 4-<J38 c, 1904 4.772c, 1905 5.256c, 19064.515c, 19074.649c, 19084.957c, 1909 
4.765c, 1910 4.972c, 1911 5.345c, and 1912 5.04c. 

^ TABLE PAGE 22. 

Here we have another example of the desire to present misleading figures. Perhaps no one knows bet¬ 
ter than Mr. Palmer that the average price per ton of beets in 1909 was not $600 as here represented. Accord¬ 
ing to the Department of Statistics, the average price was $5.35 per ton. This represents an increase between 
1899 and 1909 of 22% instead of 36% as here represented. It is interesting to note that Mr. Palmer now claims 
that in 1899 cost of production of beet sugar was 4.25c per pound. In contrast to this, reference to the 
record shows that when the beet sugar men were trying to interest capital the claim was freely made that beet 
sugar could be produced under 3c per pound, some figures being as low as 23^0 per pound. We see here the 
difiference between claims made when looking for financial assistance and when looking for tarifif assistance. 
We would call your attention to the fact that in Germany the average price per long ton paid for sugar beets 
in 1900 was $4.76; in 1911-1912, it had advanced to $6.07, so it will be seen that prices in the United States 
have not advanced to the same extent as in Europe. In addition the German farmer received the beet seed free 
from the factory and had returned to them 40% to 60% pulp. In the United States the farmer buys his beet 
seed from the factory and none of the pulp is returned to him for feeding purposes, but it is sold as a by-product 
by the factory at a nice profit. 

Now let us see whether the factorfes in the United States really did pay more in 1909 than in 1899 for 
what the farmer delivered to them. In the first place, orr beet sugar factories do not buy beets, in a strict sense, 
as the beet is only a “container.” They do buy the sugar in the beets. Now the amount of beet sugar extracted 
per ton of beets in this country increased from 199.6 in 1899 to 252.8 pounds in 1909. or 26%. So, as a matter 
of fact, the American farmer was delivering the factory 26% more sugar in 1909 than in 1899 and only receiv¬ 
ing an increase in price of 22%, or 4% less on the basis of sugar content. 

The Hardwick Committee, in an unanimous report, taking good, bad and indififerent factories, showed 
an average cost to produce beet sugar of 3.54c per pound. Mr. Palmer now tries to stretch this to 3.67c per 
])0und. None of these prices represents a “proper cost” for producing beet sugar in the United States. M’here 
a factory is properly located, thoroughly equipped and competently run, as was the case with the Spreckles 
Sugar Co. of California, the cost of producing beet granulated is reduced to 2.70c per pound, as their returns 
show. It is well known that around 3c per pound shouU be the “proper cost” of production in the United 
States, and when the figures are stretched, even to 3^ic, it moves into the “illegitimate industry” class. 

In this connection it strikes us as significant that the domestic beet sugar factories who are asking Con¬ 
gress for the privilege of taxing American consumers are reluctant to show an honest statement of the cost of 
production. With the exception of the American Beet Sugar Co. no yearly statements are issued, and every 
effort is made to conceal profits. Not in the entire record of testimony will be found an itemized statement of 
cost in a well-equipped and properly located factory, and nowhere is the admission made that beet sugar is being 
produced at a low cost in this country, although it is well known that this is a fact. The idea seems to be that 
the higher they can make their cost appear, the higher Congress must make the tarifif bounty. 

Before the Hardwick Committee the American Beet Sugar Co., in order to make their cost appear high, 
even went so far as to include as a part of their cost of production the freight which they paid on sugar from the 
factory to destination. This freight, of course, was charged to the customer, the shipment being “prepaid” in¬ 
stead of being sent “collect” for convenience. 

Perhaps the nearest thing we have to an itemized statement of cost was that given by Mr. Combs for 
six factories of the Great WYstern Sugar Co. of Colorado. This showed a stripped cost of 2.59c Mr. Combs 


2C 


“SUGAR AT A SECOND GLANCE” 


stated that his figures were authentic and were obtained from an inside man. They appear reasonable and were 
never contradicted by the factory. He was representing the farmers, who complained that the beet sugar fac¬ 
tories of Colorado were not treating them fairly in the matt<^r of prices paid for sugar beets. On his return to 
Colorado the farmers got the advance asked. 

Mr. Palmer also misrepresents in his attempt to conceal the overcapitalization of the beet sugar factories. 
His data was prepared in 1912. He goes back to 1909 and “approximates” the capitalization at $71,275,000. 
Reference to the Commercial Agencies will show that the beet sugar companies were capitalized in 1910 at $i30>" 
000,000 and produced 457,000 long tons of sugar; in 1911 capitalization, $142,000,000, production, 541,000 long 
tons of sugar. Based on their present capitalization the beet sugar factories sufficient to produce all the sugar 
we consume would be capitalized at $852,000,000. How could dividends be earned on this enormous capitali¬ 
zation and the price of sugar be reduced at the same time? The cane sugar refiners, with a capitalization of 
$110,000,000 invested in cane refining, produced in 1912 2,922,957 tons. 1 he contract cost of a beet sugar fac¬ 
tory is $1,000 per ton of daily slicing capacity and in 1889 the capitalization was on the normal basis $1,097 
ton, but by 1909 this had been extended to $2,458 per ton, or about 2^/2 times their cost, the increase represent¬ 
ing “capitalization of the tarifif.” 

CHART No. II (Page 23). 

Mr. Palmer refers to “four sea-hoard refineries.” The cane sugar refiners are: The American Sugar 
Refining Company, New York, Boston, Philadelphia and New Orleans; Arbuckle Bros., New York; National 
Sugar Refining Co., three refineries in New York (formerly controlled by the American Sugar Refining Com¬ 
pany hut stock is now being sold by the latter because it cannot be held under the law) ; the Eederal Sugar 
Refining Company, of New York; the Warner Sugar Refining Company, of New York; the \V. J. McCahan 
Sugar Refining Co., of Philadelphia; the Pennsylvania Sugar Refining Company, of Philadelphia; the Revere 
Sugar Refining Company, of Boston; the Colonial Sugar Refining Company, of Gramercy, Louisiana; the Hen¬ 
derson Sugar Refining Company, of New Orleans, and the Cunningham Sugar Company of Sugar Lands, Tex.; 
the Western Sugar Refining Company, of San Francisco, and the California and Hawaiian Sugar Refining Co., 
Crocket, California. 

Mr. Palmer’s experience must show him that there is ample competition in the refining business and that 
there is no “fixing of prices.” If not, we refer him to the United States District Attorney. 

In the suit to dissolve the American Sugar Refining Company the Government states, among other things,, 
that it has an interest in the beet sugar factories that produce 64% of the total beet sugar production. 

Now beet sugar is produced between August and January ist. Mr. Palmer makes the claim that prices 
are lower while the beet sugar factories are in operation. To test the accuracy of this statement we will refer 
to the following table prepared by Messrs. Willett & Gray, showing the average price of refined sugar during 
the first and last six months for six years: 

QUOTATIONS FOR GRANULATED SUGAR AT NEW YORK. 

Cents per pound net cash. 




1911. 

1910. 

1909. 

1908. 

1907. 

1906. 

Average Jan. 

I to July I . 

. 4-720 

5-015 

4-653 

5-036 

4.646 

4-405 

Average July 

I to Dec. 31. 

. 5-969 

4.929 

4.874 

4.878 

4-650 

4-619 

Average 

for year . 

. 5-345 

4.972 

4-765 

4-957 

4-649 

4-515 


This shows that the beet sugar manufacturer is human enough to get as much as possible for his product 
and that his prices are based on world’s values. For example, he was very glad in 1911 to sell sugar that cost 
him around 3c a pound to produce at “basis” Cjdc, which meant over 7c per pound in our Western States where 
this sugar was produced. All this because “there was a drought in Europe which reduced the European crop 
nearly 2,000,000 tons.” This shortage advanced world’s values so that refiners’ first cost of raw sugar was in¬ 
creased from June ist to October ist 2.10c per pound. The advance was then checked by the new crop Euro¬ 
pean beet sugars coming in the market. The cost to the domestic beet sugar manufacturers was not increased, 
but this did not prevent them from taking advantage of the higher price, and feeling very well satisfied that 
there was a shortage in Germany which enabled them to reap this additional profit. 

The testimony before the Hardwick Committee has clearly shown that the domestic producers’ price is 
based on the in-bond value of foreign sugars, plus the duty and cost of refining. In addition to these charges 
the beet sugar factories add the freight from New York or San Francisco to distributing market as well. In 





“SUGAR AT A SECOND GLANCE” 


21 


the sale of the domestic producer’s product, the cost of production has no relation to the selling price. We have 
a clear example of this in the price of sugar in our Western States. Take March 15 as an example, and we 
find the following quotations made by the Cane Refiners and Beet Factories: 

PRICES QUOTED ON BEET AND CANE SUGAR AT VARIOUS WESTERN POINTS ON MARCH 

15. 1913- 


Guthrie, Okla. 

Beet 

. 4 - 56 c 

Cane 

4.76c 

Omaha, Neb. 

. 4-480 

4.58c 

Denver, Colo. 

. 4.80c 

5.00c 

Kansas City, Mo. 

. 4-48C 

4.58c 

Salt Lake City, Utah. 

. 4-950 

5-150 

Seattle, Wash. 

. 4 - 6 i> 4 o 4 - 8 iMo 

Tacoma, Wash. 

. 4 - 6 iMo 4-81M0 

Helena, Mont. 

. 5-250 

5-450 

Boise City, Idaho . 

. 5-250 

5-450 

Carson, City, Nev. 

. 5250 

5-450 

Los Angeles, Cal. 

. 4 - 6 iMc 4 - 8 iMc 

Phoenix, Ariz. 

. 5-590 

5-790 

St. Paul, Minn. 

. 4 - 47^0 4 - 57 >^o 

Chicago, Ill. 

. 4-387^0 4 - 48 > 4 c 

Milwaukee, Wis. 

. 4 - 38 >^o 4.481^0 

Topeka, Kan. 

. 4-560 

4.66c 

Atchison, Kan. 

. 4-480 

4.58c 

Kansas City, Mo. 

. 4-480 

4.58c 

Louisville, Ky. 

. 4-383^0 4 - 433^0 

Cleveland, O. 

. 4 - 37 Mc 4-42MC 

Bay City, Mich. 

. 4-43/20 4.48^c 

Saginaw, Mich. 

. 4 - 433^0 4 . 48 >^c 

Detroit, Mich. 

. 4-37M0 4 - 42^0 

Pittsburg, Pa. 

. 4-350 

4.40c 

Buffalo, N. Y. 

. 4-350 

4.40c 

New York, N. Y. 

. 4-250 

4.30c 


At this point I would call your attention to the manner in which the New York price for refined sugar is 
arrived at. 


Raw sugars coming from Cuba cost refiners, basis 

96° test, cost and freight, not less than 2.22 

Insurance, y2%, or .012 

Duty 1-348 


3 580 

Refiners’ first cost, duty paid 3-58c 

Deducting usual discount of 2% from their price 
of 4.30c on refined, this leaves a margin to cover 
the cost of refining, packing and marketing of the 
difference between 4.22c and 3.58c, or .64c 

That shows you that the domestic producer bases his price on the New York price, and the New York 
price is based on the foreign price plus the duty. 

The trade will not pay the same price for beet as for cane sugar, which accounts for the differential. 

Notwithstanding the fact that all the sugar used in our Western States is of domestic production, either 
being Hawaiian cane or domestic beet, and pays no duty, the price is always higher than in the East, where the 
sugar imported pays a high duty. As a result of the tariff the consumers in these Western States are receiving 





























22 


"SUGAR AT A SECOND GLANCE” 


no benefit whatever from the fact that in their immediate locality refined sugar is being produced at a cost of 
around three cents a pound. The price only recedes as we approach the Eastern Coast, where the domestic 
producers come into competition with the refiners using imported sugar. Ihe lowest price for sugar in the 
United States is in New York. 

Mr. Palmer reiterates the shop-worn argument of the protective tariff beneficiaries: “Keep the tariff 
where it is and let us reduce the price of sugar by producing all of our supply at home.” The weakness of 
this argument has been shown time and again in other articles, but fortunately in the case of sugar we do not 
have to resort to theory, as the above example shows. Colorado produces more sugar than the people of Colo¬ 
rado consume, and the cost of beet sugar production in Colorado is as low, if not lower than any other State 
in the Union; yet the consumers of Colorado pay a higher price for their sugar than the consumers of almost 
any other State in the Union. The price of sugar in Colorado is arrived at in this way: Take the in-bond price 
of raw sugar, add the duty, add refiners’ cost of production, add refiners’ profit as reflected in the selling price; 
add the freight from sea-board to Colorado points and you get the price on which the domestic producer in 
Colorado bases his selling quotation to the Colorado trade. Similar conditions exist wherever beet sugar is 
produced. 

Tbe beet sugar producers are endeavoring to have Congress retain the present rates of duty which ad¬ 
vance the price of sugar to consumers all the year around nearly 2c per pound because they make the claim that 
the domestic production lowers the price of sugar a trifle for the two or three months that it comes most freely 
on the market, which, of course, makes their position appear ridiculous. 

Mr. Palmer and others who wish the present high rates maintained make the charge that “the American 
refiners of foreign raw sugar are expending large sums of money in an effort to obtain free raw sugar, which 
would destroy their only competitor,” after which they could, at any time, advance their prices beyond world’s 
values, or, as Mr. I’almer puts it, “raise the price of sugar at will.” This is absurd. Does Mr. Palmer believe 
that it would be easier for our refiners to compete with the i6,odo,ooo tons of sugar, produced outside of the 
United States, which in the case of free sugar would have unrestricted entry, than with the 600,ooo tons of beet 
sugar produced in the United States, 64% of which, according to the allegations in the Government’s suit, is 
controlled by the American Sugar Refining Company ? 

The independent sugar refining companies, of whcm the Federal Sugar Refining Company has probably 
been tbe most aggressive, have for years advocated either free sugar or a material reduction in the tariff'. Not 
only would they quite naturally like to see their chief competitor, the “Sugar Trust,” deprived of some of the 
Government ‘‘pap” now being received through the indirect subsidy paid to their beet sugar plants, but they 
would also like to have a chance at the increased business resulting from an increased consumption which would 
follow either a material reduction or free trade and which could be handled at a reduced expense. In other 
words, their position in this important matter is identical with that of the consumer, who is anxious to handle 
more sugar at a reduced expense. 

In order to prejudice legislators, Mr. Palmer tries to show that it is the American Sugar Refining Com¬ 
pany, or Sugar I rust, that wants free trade in order to crush out the domestic industry. This comes with rather 
bad grace when it is considered that the beet sugar companies, in which the American Sugar Refining Company 
is interested, are contributing to Mr. Palmer’s annual salary of $10,000. The American Sugar Refining Company 
is clearly on record in 1909 as desiring that the present tariff on sugar be retained, as reference to the Payne- 
.-Mdrich Tariff' Hearings, pages 3430 to 3440 shows a brief filed by this company to this eff'ect; but seeing tbe 
hand-writing on the wall, they now state they would be willing to see a nominal reduction, and in this they ex¬ 
press the sentiment of a considerable portion of the beet sugar producers, who, among themselves, for some 
months b.ave contended that the time had come when it was better for them to admit that they could stand 
some reduction than to continue the hopeless task (hopeless because of the facts that have been arrayed against 
them ) of trying to defend the present “pork-barrel” rate. This element, however, has been steadily voted down 
by the followers of those who, by tbeir system of political jugglery in Y'ashington, have been able to retain this 
special privilege legislation. But Mr. Palmer quotes on page 23 some testimony of IMr. Atkins, which would 
tend to prejudice Congress against free sugar. That neither Mr. Atkins nor the company he represents is in 
favor of free sugar, is clearly shown by his testimony before the Ways and Means Committee, reading as 
follows: 


“SUGAR AT A SECOND GLANCE” 


2o 

Mr. Harrison: 1 would like to ask the witness a question. Mr. Atkins, you are vice-president of 
the American Sugar Refining Company, which is popularly known as the Sugar Trust? 

Mr. Atkins: It is sometimes referred to as that. 

Mr. Harrison: Do you appear here representing the sentiment of the directors of that company? 

Mr. Atkins: Yes, sir; with their authority. 

Mr. Harrison: Are you in favor of free sugar? 

Mr. Atkins: I am not, and my company is not. 

Mr. Harrison: I wish to ask you further whether you know of the campaign which has been 
conducted by Mr. Frank C. Lowry, as Secretary of the Wholesale Grocers’ Committee, in favor of a 
reduction in the duty on sugar? 

Mr. Atkins: I have occasionally received a pamphlet expressing Mr. Lowry's views on the suD- 

ject. I 

i 

Mr. Harrison: li has been suggested, also, that the campaign conducted by Mr. Lowry was at 
the instigation of the American Sugar Refining Company; is that true? 

Mr. Atkins: It is untrue. One reason why I appear before this committee is to clear that matter 
up, not only with your committee, but with the whole country. We are opposed to free sugar for the 
reasons that are given here. We are, however, desirous of a reduction in the tariff. 

Mr. Harrison: What is the extent of the interest of the American Sugar Refining Company in 
the beet sugar plants of the United States? 

Mr. Atkins: We hold not so much as we had at one time. At present I think it is- 

Mr. Atkins’ Secretary: It is given at page loo of the hearing before. Would you like to have it? 

Mr. Harrison: No, I will not trouble you for that. 

Mr. Atkins: It was $23,000,000, the par value; it is since somewhat reduced. It is approximately 
$22,000,000, the par value now. We have disposed of some holdings. 

CHARTS Nos. 12 and 13. 

For the first time in his treatise, Mr. Palmer recognizes the peculiar conditions that existed in 1911, an 
exceptional year in the sugar market. Such a sensational rise in the price of sugar had not been seen in fifty 
years, and is not likely to be seen again. Up until July, 1911. conditions had been about normal, but then it 
became known that drought was seriously injuring the growing beet crop in Europe and prices began to ad¬ 
vance. As a result of this drought the European crop was reduced from 8,113,000 tons to 1910-11 to 6,340,- 
000 tons in the campaign of 1911-12, a shortage of 1,773.000 tons. When in the summer it became known that 
such irreparable injury had been done that it would affect the world’s supply of sugar, prices abroad advanced 
sharply, the London market on June ist being los 5 p |6 reached 17s 9d on September 28th, or 7s 3 j 4 d, nearly 
2c per pound. 

The new crop sugars began to be harvested in October and of course everyone in the sugar world recog¬ 
nized that, notwithstanding the shortage in supplies, as soon as these new crop sugars began to be available prices 
abroad would recede and that our market would do the same; also that, as far as the United States market 
was concerned, the market would recede further as soon as the new crop Cuban sugars became available in 
January, 1912. Although their cost of production had not increased the domestic beet sugar interests quite nat¬ 
urally took full advantage of the high prices that prevailed because of the European shortage and were anxious 
to dispose of as much of their sugar as possible before the lower prices which were certain to come after the first 
of the year when Cuban sugars would be in full supply, and as consumption in their regular territory would 
only take care of a certain amount of their sugars they were forced to extend their territory in order to more 
rapidly dispose of their product on the high market. They found it better business to absorb something in 
freights in order to reach remote markets and in that way dispose of their sugars before the approaching de¬ 
clines became effective than to carry their sugars in their own markets and sell them at lower prices later in 
the year. 

By February, 1912, refiners’ price had dropped to 5 35c as a result of their ability to get their raw sugar 
supplies from Cuba at ijdc under the high point. From this it will be seen that the beet sugar producers’ ideas 
were quite right and that it was better for them to sell in the fall of 19TI at 6.50c and absorb freights to remote 
markets than to carry these sugars into 1912 and sell on the lower prices quoted above. The same conditions 
would prevail in any yea*- when prices were relatively high in. these Tour months and the prospects favored a 



24 


“SUGAR AT A SECOND GLANCE” 


decline after the first of the year because of the large Cuba crop coming on the market. Such a condition is not 
the result of any virtue on the part of the beet sugar producers, but is simply a situation that would be recog¬ 
nized and taken advantage of by any business man. 

Mr. Palmer also quotes certain testimony of independent refiners which shows that they are willing to 
meet the trust or foreign competition on equal terms but that they are not disposed to regard the “bounty fed 
competition of the trust’s beet sugar plants as fair competition. 

CHART No. 14 (Page 26). 

Presents rather a striking illustration of why the tariff on sugar should be removed, or materially reduced. 
Mr. Palmer well knows that the 600,000 short tons of domestic beet sugar produced in 1911 did not cost on the 
average 3^c per pound to the manufacturer, as he now claims, or even the 3.67c that he claimed in table on page 
22. Nevertheless he adopts this fictitiously high figure and arrives at the conclusion that the cost of producing 
this crop was $45,000,000. The average price of sugar during the last six months of 1911, when the major por¬ 
tion of this beet sugar was sold was 5.969c per pound. So that even taking the fanciful basis which Mr. Palmer 
selects for his calculations, it would appear that this beet sugar must have realized in the neighborhood of $71,- 
000,000, or 57 per cent, more than the cost of production. 

But as a matter of fact, the average stripped cost of producing this 600,000 tons of sugar was, no doubt, 
nearer 3c per pound than 3^c per pound, as stated by Mr. Palmer. 

Now let us take a look at Mr. Palmer's charts and see how he misrepresents the relative returns to the 
people in the production of beet and cane sugar. In the first place he makes the claim that the cost of refining 
including labor, office help, fuel, bone-black, packages and all other supplies is $6.72 per ton, or 30c a hundred 
pounds, and represents this to be the cost to our refiners of taking raw sugar and placing it on the market in the 
shape of refined sugar. 

It hardly seems possible that Mr. Palmer does not know that this figure is not correct. The barrel alone 
in which this sugar is packed is worth 15c per hundred pounds; the brokerage is 3c a hundred, leaving but 12c 
per hundred pounds from Mr. Palmer’s figures to cover all other expenses. In contrast to this, we find that 
when figuring the cost of refining beet sugar, Mr. Palmer says they pay 2.373c per pound for their (raw material) 
beets, yet their finished cost is 3.75c and it will be noted that he leaves 1.38c per pound for the operation of 
refining and putting on the market, which after deducting the package and brokerage charges mentioned above 
leaves the beet sugar factory 1.20c per pound in contrast to the .12c per pound he leaves for the cane sugar refiner 
to cover very much the same operation. 

If Mr. Palmer will look at the record he will find that it has been testified to, over and over again, that 
the cost of refining cane sugar and putting it on the market is about t^c per pound. In some factories, the 
cost is without doubt higher than this. But accepting this as a basis we find that the 1,801,319 short tons of 
Cuban sugar refined in 1911, which Mr. Palmer is pleased to refer to as “imported foreign sugar” returned to 
American industries $25,219,265 instead of the $12,104,863 as represented by Mr. Palmer. But this figure only rep¬ 
resents a part of the return to American industries from the consumption of cane sugar in the United States in 
1911. We find that Louisiana in that year produced 288,074 tons of raw sugar, on which they claim the average 
return to American industries was 3^c per {)ound, or $24,198,216. To this must be added the cost of refining. 
.625c per pound or $4,033,036, making a total of $28,231,252. Porto Rico produced 280.622 tons of raw sugar on 
which they claim a cost to produce of 3c per pound and return to industries of $18,857,798; the cost of refining 
makes $3,928,708 or total of $22,786,506. Hawaii produced 482,231 tons at an alleged cost of 2.96c per pound 
on which the return to industries was claimc 1 to be $31,973,844. Add the cost of refining and we get $6,813,754 
or total of $39,083,578. In addition there were 168,408 tons of Philijipine sugars refined at an estimated cost of 
i^c per pound on which the return to American industries was claimed to be $6,601,593. Add the cost of refin¬ 
ing, $2,357,712, and we get a total of $8,959,305. All of this makes a grand total of $123,983,906 returned from 
cane sugar consumed in the United States, in contrast to the $12,104,863 represented by Mr. Palmer. 

Thus we have an example of how Mr. Palmer has permitted his enthusiasm to disregard facts. 

If the 1,800,000 tons of sugar imported in 1911 from the “foreign country” of Cuba were replaced, as 
Mr. Palmer suggests, by the domestic beet production, Cuba would be deprived of its natural market and the 
United States would be deprived of its natural source of supply. The Island of Cuba, adjacent to our shores. 


“SUGAR AT A SECOND GLANCE” 


25 


has been favorably equipped by nature for the economi:al production of sugar and it is proper that the people 
of the United States should enjoy the benefits of this natural advantage. For many years to come they can 
get all the sugar they want from these sources of cane supply, Cuba, Porto Rico, Hawaii and the Philippines, 
and secure this sugar at a low cost if it were not for the high tarifif that enhances the price. Mr. Palmer urges 
that, instead of taking advantage of this, we should continue our present high tarifif rate and thus enable the 
beet sugar companies to overcapitalize, until (on the present basis of capitalization) they reach a capitalization of 
$852,000,000 and we have an added production of 1,801,319 tons. Upon this enormous capitalization, the Amer¬ 
ican people will be called upon to pay dividends, and the only way this can be accomplisbed is by a relative in¬ 
crease in price to consumers. 


CHART No. 15. ! 

If the farmer is to reap the indirect benefits claimed by rotating sugar beets with other crops once in 

every four years, it is clear that one-fourth of the avai able area, 274,000.000 acres, must be cultivated each 

years to sugar beets. This amounts to 68,500,000 acres. If 1,670,000 acres will produce all the sugar we require, 
it is also clear that this is such a small percentage of the amount necessary in order that the farmer may reap 
the indirect benefits that the real advantage to the farmer will be negligible. 

Mr. Palmer doesn’t pretend to explain where th labor supply, sufficient to cultivate this land in the 
proper manner, is to come from, or where the enormous capital necessary to the erection of so many beet sugar 
factories is to be acquired. It has never been a question of the amount of land available for growing sugar beets, 
or for that matter, any other crop. 

Then, too, what is to become of the cane sugar produced in Porto Rico, the Philippines, Hawaii and Cuba. 
Of course the beet sugar interests know that the sugar industry in Louisiana is an unnatural one and cannot 
increase. All available lands in Porto Rico and Hawaii are now under cultivation, so there can be no increases 
from this quarter. The beet sugar men succeeded in having written in our tarifif law a clause limiting the free 

entry of Philippine sugars to 300,000 tons annually and as Cuba is handicapped by the high tarifif rate they 

feel they have the cane situation pretty well tied up, so far as the lowering of the price of sugar to consumers 
from these sources of supply is concerned. 

But, as previously stated, it is not proposed to interfere with the legitimate growth of the beet sugar in¬ 
dustry and a reduction to the rate which we urge, 60c a hundred on 96° Centrifugals will certainly not do so, as 
the farmer who grows sugar beets does not receive the benefit of the present high tarifif on sugar. 

AMERICAN AND EUROPEAN PRICES FOR BEETS COMPARED. 

It will be seen that sugar beets are cultivated under vastly different labor conditions than our other farm 
products. 

Let us see how the position of our beet growing farmer, who acts to a great extent in the capacity of an 
overseer, compares with the beet groivcr of Europe. 

Quite naturally the beet sugar factories in America desire to purchase their sugar beets from the farmer 
at the lowest possible price. They began by paying the farmer $4.50 per ton for beets, without reference to 
the sugar contents. Finding the farmers would not grow sufficient quantities at this figure, the price has slowly 
advanced. 

In some Western States a flat price per ton is still paid, but the highest basis that is paid anywhere in this 
country for sugar beets, is on the following scale: ‘^$4.50 per ton for beets when the sugar contents is 12%, 
and 33 1-3 cents per ton advance for each 1% increase in the sugar content.” 

The average sugar content of beets in the United States is between 15% and 16%, which is nearly the 
same as in Europe. 

In some of our far Western States the test frequently runs uj) to 18% and 19% or more, probably bigher 
than in any other country in the world. 

Take as a basis 15% beets, for which test the high¬ 
est price paid in the United States would be (short ton). $5.50 


26 


"SUGAR AT A SECOND GLANCE” 


j ]Mr. F. O. Licht who is recognized all over the 

world as the leading statistician of Europe, gives the 
average price paid the farmer for sugar beets in Germany 
'(where the tariff on raw sugar is 47c per hundred against 
jour rate of $1,685, ^^^^1 on refined sugar 52c against our 
rate of Si.90) per long ton, as follows; 

1909- 10. $5.30 

1910- 11. 5.44 

1911- 12. 6.07 

He also states that "conditions in the other 

European beet sugar countries do not differ much from 
those in Germany, and adds, “except that the average 


beet price per long ton in Russia is about”. $9 42 

L. Behrens &: Sohne, for Belgium and Holland. 

season 1911, fixed the price per long ton at. $5-79 

These prices, however, do not tell the whole story. 


F. O. Licht states; "W’e might add. for your information, that the beet growers of Europe receive other 
returns for their beets, besides the cash, viz., they are furnished with beet seed free of charge, (in the United 
States the farmer buys his beet seed from the factory), they receive allowances for freight, and get from 40% 
to 60% of the pulp returned to them, zcithout charge.” 

In the United States no beet pulp is returned to the farmer without charge, but this by-product of the 
factory is sold to the farmers, and nets the factory a very nice return. (Senate Hearings, page 404.) 

A ton of 15% beets contains a possible 300 pounds of sugar. 

We now desire to amplify and reiterate this point by quoting from the ’’Balance Sheet and Trade Report 
of the Dirschau (Germany) Sugar Factory, for the Season 1911-1912,” as follows; 

"We have followed the example of other factories and have increased beet prices ]\L—.40 per too 
kilos for 1912-1913, viz.; 

“$5.80 per long ton—shipment by end of October. 

“$6.04 per long ton—shipment by first half November. 

“$6.28 per long ton—shipment from November 16th to closing down of factory. 

"Rebates for freight will be paid as usual. The beet growers will receive additional payments if 
the profits ‘of the stockholders amount to more than 6%.’ (Our factories that have pait as much as 100% 
dividends would regard this as ‘confiscation of property.’) During the past year, 1911-1912, we have made 
additional payments to beet growers, as per contract, at the rate of 89c per ton, and we have voluntarily 
])aid cur regular shippers an additional rate of 79c per ton.” 

ANALYSIS OF PRICE PAID AMERICAN FAkMERS. 

Mr. F. O. Licht also says in regard to the position of the beet grower in Europe; 

‘'In answer to your question whether the beet growers are interested in high sugar prices, we must say 
that some of them do profit by them. In Germany beets are procured in the following manner; about half of 
the beets are grown either by the factories on fields wh ch they own or lease, or by individual partners, and 
stockholders of the factories. The other half of the beets are grown by independent farmers and sold to the 
factories by contracts which are renewed annually. A fixed price is agreed upon for these beets when the con¬ 
tracts are made and the growers of these beets naturally neither gain nor lose by any subsequent changes in 
the price of sugar. On the other hand conditions that govern the sale of beets that are grown by the factories 
or their stcckh.ohhrs are entirely different. As a rule a minimum price, which is always very low (this accounts 
for some of the low prices that have been given), is fixed and the grozvers receive further pavments out of the 
factories’ profits. At the end of each year the net profits are proportioned and distributed among the beet-grow¬ 
ing stockhol lers according to the quantity of beets that each one furnished. 

"It is evident, therefore, that the growers of abo 4 one-half cf the beets grown in Germany are vitally 
interested in the movements of sugar prices.” 







“SUGAR AT A SECOND GLANCE” 


Our beet sugar factories delight in dilating upon what wonderful things they do for the farmer, and at 
times boast that they “pay the farmer as much as $6.50 per ton for beets.” 

Let us analyze this statement, and ascertain exactly zvhat it is they pay for their ratv material, before it 
enters the factory: 

iCrst, the factories are not buying beets, they are buying sugar. When they buy a ton of beets, they are 
buying the sugar that is contained in those beets, and they pay on the basis of sugar contents. 


\\ lien they pay the farmer: 

^4.50 per ton for i2jc beets containing 240 lbs. 

• sugar tmy pay the farmer for the sugar that is in the 
beets at tne rate of . 1.87c per lb. 

$5.50 per ton for 15% beets containing 300 lbs. 
of sugar they pay the farmer for the sugar that is in 
those beets at the rate of. 1-^30 per lb. 

$6 50 per ton for 18^ beets containing 360 lbs. 
of sugar they pay the farmer for the sugar that is in 
those beets at the rate of. 1.80 per lb. 


When they pay $6.50 for 18% beets, they are actually paying less for the sugar in the beets (which is 
what they are buying), than if they paid $4.50 for 12% beets or $5.50 for 15% beets. It is clear that the reverse 
should be true because of the greater value to the factory of the higher test beets. 

If the factories were honest with the farmer and paid for the 18% beets (which are of greater value be¬ 
cause they are easier to work) the same basis as on the lower test they would pay $6.73 per ton instead of 
$6.50 per ton. 

In this way the factories take from the farmer, who they “love,” a part of the benefit derived from the 
fact that the beets have been properly cultivated and the Lord has sent His rain and sunshine at the proper 
time and in sufficient quantity to produce the best results. 

FACTORY POSITION TOWARD FARMERS. 

The beet sugar factories have for many years paid particular attention to our tariff laws, maintaining at 
all times in Washington what is credited as being the strongest “lobby” there. The American Beet Sugar Asso¬ 
ciation has an office in Washington, and their name appears in the telephone directory, although they do no sugar 
business in Washington. What kind of tarifif law is it that meets with their approval? 

As a further indication of the beet factories’ lack of regard for the beet farmer, let us refer to the fact 
that for years they have been trying to get the Government to allow sugar beets to come in free of duty. They 
did succeed in the Payne-Aldrich tarifif, in having the duty on sugar beets (in which the farmer is interested), 
reduced from 25% to 10% ad valorem. The rate on the ordinary garden beet remained unchanged, at 25^. 

The rate on sugar beets was reduced, so as to permit the Michigan factories to import sugar beets from 
Canada, in competition with the [Michigan farmer. 

The Treasury Department's figures show that importaticns of sugar beets from Canada, through Detroit 
and Port Huron, in 1909, were 30.731 tons; in 1910, 56,950 tons. These importations paid a tarifif rate of 45c 
per ton. 'I'he sugar contents of the beets in 1909 was about 16%. 1910 15^2%, an average of 15)4%. which 
means that each ton of beets imported contained 315 lbs. of sugar, on which the duty was 45c, making the tariff 
rate on sugar in the beets at about 14c per hundred ])OirKls. 

SUGAR BEET SEED, which the farmer in this 
country might grow, but which, as a matter of fact, is 

all imported by the factories from Europe. Duty Free 

SUGAR BEE'l'S. in which the farmer is also in¬ 
terested. pays per 100 lbs. for the sugar in beets a duty 

equivalent to . .14' 

SUGAR IN 'i'HE S.-\CK. in which the factory is 

interested, pays a duty per 100 lbs. on refined sugar. $1.00 

—1 if it ic q6° test raw sugar. 'F- 

and 20% less- if imported from Cuba. 









28 


SUGAR AT A SECOND GLANCE” 


The fact that the factories “protection” is all out of proportion makes it perfectly clear that the “lobby¬ 
ists” who have had so much to do with onr tariff laws, and who have been paid by the sugar factories to look out 
for their interests, have earned their money. Yet they still go to our legislators and insist that they “want the 
present tariff for the benefit of the farmer.” Such rot! 

It is the beet sugar factory that gets the great benefit from the present high tariff rate and not the sugar 
beet grower. 

Reduce the tariff to the rates zve propose and the fanner zvill find his position unchanged and there is 
ample testimony to show that he is now reasonably well satisfied! 

The beet factory proposed and put through a lo^ tariff' for the farmer who grows sugar beets. We 
now propose approximately a 24% rate for the factory, but the latter cries “ruination!” 

Mr. Palmer refers to the $100,000,000 sent abroad to “foreign countries” for the purchase of sugar which 
we should preferably produce at home. Seventy-eight million dollars’ worth of sugar is bought by the people 
of the United States in their insular possessions, Porto Rico, Hawaii and the Philippines, and in return the United 
States furnishes these islands with other commodities of about the same value. We buy about $76,000,000 
worth of sugar annually from Cuba and in return our industries sell in Cuba other commodities valued at $63,- 
000,000, all of which promotes a larger market for our jiroducts. The promoters of our domestic beet sugar 
factories and land companies, however, are not interested in reciprocal trade of this kind, but desire to check it 
so that they may reap the benefits of the present high tariff' to the exclusion of everything else. 

CHART No. 16 (Page 28). 

Are further attempts at misrepresentation. An attempt is made to convey the impression that it is the 
typical American farmer who is engaged in the cultivation of sugar beets, but this is not a fact. Let us see what 
the Department of Agriculture has to say about this phase of the industry. “As a rule the farmer, if he grows 
beets to any extent, does not have on his farm sufficient labor to take care of the work of thinning, bunching, 
hoeing, and harvesting the sugar beets.” (Report on Progress 1901, p. 19.) 

“Not only does the typical American farm and farm community lack the number of laborers required, but 
the labor itself is of a kind distasteful to our farmers.” (Ibid., 1906, p. 24.) 

The manner in which this need of extra labor has been met is instructive, not only as regards the beet- 
sugar situation itself, but also as regards the general trend of industry in the United States during the last gener¬ 
ation. 

Almost everywhere in the beet-sugar districts we find laborers who are employed or contracted for in 
gangs—an inferior class utilized and perhaps exploited by a superior class. The agricultural laborers in the 
beet fields are usually a very different set from the farmers. On the Pacific coast they are Chinese or Mexicans. 
Except in southern California, where the Mexicans are near at hand, most of the work is done by Japanese un¬ 
der contract, there being usually a head contractor—a so't of “sweater”—who undertakes to furnish the men. 
In very recent years Hindus (brought down from British Columbia) also have appeared in the beet fields of 
California. In Colorado, “innnigrants from old Mexico compete with New Mexicans {i. c., born in New Mex¬ 
ico), Russians, and Japanese.” Indians from the reservation have been employed in Colorado, and boys have 
been sent out under supervisors from the juvenile cour of Denver. At one time convict labor was used in 
Nebraska. 

In some parts of Colorado, in Montana, and the beet fields of the single factory in Kansas, Russian Ger¬ 
mans are employed. These curious and interesting people are Germans who were imported into Russia by the 
Empress Catherine. They persistently maintained their "ace and language and religion. In recent years they 
have been driven from Russia by persecution. They now center about Lincoln, Nebraska, and are shipped under 
contract to the beet fields, where they are assiduous and much-prized workers. They are much more welcome 
than the fickle Indians and Mexicans; more welcome even than the Japanese, who are quick and capable, but 
often break their contracts. The Cerman-Russians camp in whole families at the beet region for the summer; 
men, women, and children toil in the fields. In Michigan the main labor supply comes from the Polish and 
Bohemian population of Cleveland, Buffalo, and Pittsburgh. The circulars issued by the Department of Agricul¬ 
ture and by the State boards and bureaus repeatedly call the attention of the beet farmers to the possibility of 
-employing cheap immigrants. The troublesome labor problems, it is said, need not cause worry; here is a large 


"SUGAR AT A SECOND GLANCE” 


29 


supply of just the persons wanted. “Living in cities there is a class of foreigners—Germans, French, Russians, 
Hollanders, Austrians, Bohemians—who had more or less experience in beet-growing in their native countries. 
V. ¥ V Every spring see large colonies of this class of workmen moving out from our cities into the beet 
fields. ’ (Report on Progress, 1904, p. 37. Compare the report of the Kansas State Board of Agriculture cited 
above, p. 19). 

Thus we see that so far as the cultivation of sugar beets is concerned, the high-class American laboring 
man, who must be protected, is a myth. 

The expense of this field labor referred to in Chart No. 16 must be borne by the farmer and is calculated, 
allowed for and covered by the factory in the price they pay the farmer for his beets. Naturally, the beet- 
sugar factories in America desire to pay as low a price as possible for their sugar beets. They began by paying 
the farmer $4.50 per ton for his beets, without reference to the sugar contents. Finding the farmers would not 
grow sufficient quantities at this figure the price has slowly advanced. The Department of Agriculture shows that 
the average price for sugar beets in the United States for 1911- 1912 was $5.50 per short ton. 

In Germany, where the protective tariff on raw sugar is 47c a hundred pounds (in contrast to our rate of 
$1,685 foreign raw sugar and $1,348 on Cuban raw sugar of 96° test) and 52c a hundred on refined (as com¬ 
pared with our rate of $1.90 per hundred pounds) the average price per long ton of beets in 1909-1910 was $5.30, 
1910-1911 $5.44, and 1911-1912 $6.07. In addition, the farmer in the United States is required to buy his beet 
seed from the factory, but in Germany, besides the money for his beets, he receives the beet seed free and has 
40 to 60% of the beet pulp returned to him for feeding purposes; in the United States the pulp is sold by the 
factory at a nice profit. 

In order to divert attention from their disposition to overcapitalize and their ability to make excessive 
profits on watered stock, the beet sugar interests lay much stress on the agricultural phase of their industry. The 
beet sugar factories themselves recognize that the farmer who grows sugar beets does not require a high protective 
tariff, as it has been shown above that they pay the farmer no more, and if anything, less, than is paid by the 
factories in Germany, where the protective tariff is about the same as we have urged for adoption in the L^nited 
States. 

Ample evidence has been presented by the beet sugar companies to show that the farmer is well satisfied 
with his present condition. The Republican party fully recognized that from an agricultural point of view no 
protection to the beet sugar industry was necessary and none was given. Sugar beet seed is admitted free of 
duty and sugar beets (both products of the farm) pay only a nominal rate of 10%. The Washington representa¬ 
tives of the beet sugar factories arranged for this. While retaining the high rate of duty on sugar, the product 
of the factory, in the Payne-Aldrich Bill, they arranged to have the tariff on sugar beets, the product of the 
farm, reduced from 25% to 10% ad valorem. The rate on ordinary garden beets remained unchanged at 25%. 



House of Japanese Beet Field Laborer, California. 







30 


SUGAR AT A SECOND GLANCE’ 



Types of so-called “ high-class American labor” employed in 
the Sugar Beet Fields of the West for whose heneht and protec¬ 
tion the present Tariff is sought to be maintained. 



Types of Japanese Laborers in Beet Fields, Salinas Valley, California. Typical Hindoo Beet Field Laborers, Saledad, California. 













“SUGAR AT A SECOND GLANCE” 


31 




Typical Japanese Laborers Employed in Western Sugar Beet Fields. 

















-SUGAR AT A SECOND GLANCE'’ 


CHART No. 17. 

The factory process is entirely a mechanical one as evidenced by the claim of beet sugar companies who 
boast that “the beet is not touched by human hand from the moment it enters the factory until it emerges as 
refined sugar.” Moreover witnesses before the Hardwick Committee estimated the labor cost in the beet sugar 
factory at 14c per 100 lbs. The difiference in labor cost between here and abroad is equalized by other elements 
of economy in the operation of the American factories. The cost of fuel is less, the efficiency of the factory is 
greater, the sugar is refined directly at the factory instead of produced as raw sugar at one factory and refined 
in another, and the factories are conducted on a larger scale in America than abroad and thus the cost of opera¬ 
tion reduced. Hence there is no justification for a high rate of duty on the basis of protecting the labor em¬ 
ployed in the beet sugar factory. 

The tariff' rate we propose is equal to $10 to $12 per ton. 

Let us now consider how our domestic beet sugar industry would fare under the rate zvliich zve propose. 

It is well known in the trade that where factories are properly located and thoroughly equipped, there 
should be no difficulty in producing beet sugar at 3c per j)ound (see Hardwick Hearings), and the beet men 
themselves boast of this when seeking financial assistance. 

Taking their own figures, the cost of producing and selling in good, bad and indifferent 


factories, the Hardwick Committee shows that the average cost was only . 3-54C per lb. 

Messrs. Willett & Gray show that the average New York refiner’s price for the past seven 

years on refined sugar has been.. 4.98c per lb. 

The Department of Commerce and Labor, Bureau of Statistics, No. 240, page 517, shows 
that the average cost per pound, free on board in foreign countries, of the raw sugar imported, 

1905-1911, inclusive, was . 2.378c per lb. 

Add the freight, to get the average cost laid down at U. S. ports, say.14c per lb. 

Making the in-bond price delivered at U. S. ports... 2.518c per lb. 

Add the duty which we propose on 96° test, 60c on full duty sugar, and 48c on Cuban importa¬ 
tions, making average rate actually paid, say..53^ per lb. 

Making refiners’ first cost, duty paid. 3.04c per lb. 

Add the margin between price paid by refiners for raw sugar and their selling price on refined, 

the past seven years .859c per lb. 

Making refiners’ average selling price, under proposed new rate . 3 - 907 ^ per lb. 

New York. 


The beet sugar factories are located in the interior and sell their sugar above the New York price (see 
Bulletin No. 12), but, as this advantage is partly offset by the fact that the trade will not pay as much for beet 
sugar as for cane, we have not taken this advantage in price into consideration in this calculation. 

We find that the rate we propose would give beet sugar factories who produce at 3^c per lb. a profit, as a 
direct result of the tariff, of .407c per lb., or $8.14 per ton. 

And those properly located and equipped, and who produce sugar at 3c, a profit of .907c per lb., or $18 
per ton. 

A cane refinery in New York is very glad to make an average profit of y^c to 3-160 per lb. 

As the average price of granulated, under the present tariff, has been 4.98c per pound^ the saving to the 
American people, under the proposed rate, zvould be over ic per pound, or over seventy-five million dollars on 
the amount of sugar consumed in 1911. 

It is, therefore, apparent that the rate we propose will amply protect, for all legitimate purposes, the 
sugar industry of Porto Rico, Hawaii, Philippines, and also our domestic beets. It will only prevent the over- 
capitalization of beet sugar plants, and the improper location of factories, where natural conditions are not such 
as to produce the best results. The industry would be on a much better footing if the tariff were revised so 
as to prevent both of these conditions, which are fundamentally so unsound. 

IN ALL OUR CALCULATIONS WE HAVE PROVIDED EOR THE BEET GROWER TO RE¬ 
CEIVE THE SAME PRICE THAT HE NOW RECEIVES EOR HIS SUGAR BEETS. So that, while there 











“SUGAR AT A SECOND GLANCE” 


33 


vs ample room for disputing some of the statements regarding the farmers’ “indirect benefits” for the purpose of 
this argument, we can admit all that is claimed by the beet sugar factories. 

CHART No. i8. 

Mr. Palmer's claim that a material reduction in or the removal of the tarifif on sugar “would enable the 
seaboard refiners of imported raw sugar so to reduce the price of refined sugar as to destroy the domestic sugar- 
producing industry, after which, with a complete monopoly of the sugar business, the refiners could fix at will 
the price American consumers would be compelled to pay for their product'’ is pure evasion. 

First he claims that the American industry is to be destroyed if the tarifif is removed, because of importa¬ 
tions from foreign countries. Thus he recognizes that prices to the consumer will be lowered. We do not sub¬ 
scribe to the belief that free sugar would destroy the domestic beet sugar industry, because our lands are as 
fertile, our farmers as intelligent, and our factories as efficient as anywhere in the world, but for the purpose 
of this argument accept Mr. Palmer’s theory, and we find that he now claims that because 541,000 tons of 
sugar, or approximately one-seventh of our consumption, is done away with, the world’s production of 17,000,- 
000 tons, which will have free access to our markets, will combine to put the price up on the American con¬ 
sumer. To assume such an attitude is little short of ridiculous. We must not lose sight of the fact that accord¬ 
ing to the Government's suit 64% of our beet sugar production is produced in factories in which the sugar trust 
is interested. 

Where does Mr. Palmer get average rate of i.345c per lb.? This is even lower than the lowest rate im¬ 
posed, to wit, the Cuban rate of 1.348c per lb. on 96°. Notice that he here estimates the average American family at 
5 persons instead of 5.31 persons in accordance with the report of the Bureau of Labor. Nor is it so that this tax 
if removed would fall upon the laboring class of people in some other form as is evident by the disposition of 
the House shown to substitute the Income Tax for it and this tax is to be levied upon individuals and corpora¬ 
tions and copartnerships with incomes of more than $5,000 per year, so that the poorer classes would be absolutely 
relieved of the burdens of this duty and would reap the full benefit of the reduction by reason of the removal 
of the duty, as was the case between 1891 and 1895 when the price of sugar fell, by reason of the removal of 
the duty on raw sugar. But if a reduction would not affect the ultimate price to the consumer why should the 
domestic interests oppose it? 


CHART No. 19 (Page 31). 

The average price of sugar in 1900, 5.32c per lb., was the highest average reached in all the years between 
1891 and 1911. Mr. Palmer seems to have been careful to select this particular price for the purposes of his com¬ 
parison. A fairer way would have been to have taken the average price for all the years between 1900 and 1910, 
which would be 4.83c per pound, and compare such a price with the average price of 1900, to wit, 4.972c per j^ound, 
which would show an increase in price over the lo-year average of 39c instead of a decrease, as compared with 
the price in 1900 of 7%, as represented here, or a total difference of lo^c between Mr. Palmer’s representations 
and actual conditions. Mr. Palmer was careful not to trespass upon 1911, during which time the average price 
was 5.345c per pound, or .013c per pound above 1900, and .515c per pound, or 10^2% above the average rate of 
4.83c per pound between 1900 and 1910. 

According to the Government statistics the price of sugar beets per ton in 1900 was $4.50, and in 1910 
was $5.35 instead of $6.00 per ton even in 1909, as claimed by Mr. Palmer in Table on page 22 of this volume. 
Such a difiference in ])rice represents an increase of but i8p2% between 1900 and 1910, instead of 26.8% as rep¬ 
resented by him in this Chart. 

The reason for the small increase in the price of sugar as compared with other commodities is the natural 
o])eration of the law of supply and demand. Moreover, the sugar industry is so vastly diversified and so widely 
distributed over the world that it would be impossible to form an organization that would be able to monopolize 
the industry or control the ultimate price to the consumer. The in-bond price of sugar depends upon world¬ 
wide conditions. It would require billions of capital to bring the industry under one organization as well as 
the co-operation of all governments engaged in the production of sugar. Both of which achievements would be 
impossible. Such a condition of affairs does not apply to any other commodity in such general use. 


34 


“SUGAR AT A SECOND GLANCE” 


CHARTS Nos. 2'0-2i-22-23 (Page 32). 

Emphasize the point we have previously made; that the price of sugar the world over is to a great extent 
governed by world's conditions, and as the supply has kept pace with the demand there has not been a general 
advance in price. This, however, does not seem to have any great bearing on our tariff situation, considered 
either from a tariff-for-revenue standpoint or from the Republican doctrine or a tariff to equal the diff'erence in 
cost of production between here and abroad. 

Wholesale prices are given from 1900-1910 in Germany and Great Britain, while United States for 1890 
to 1911. In the United States in 1890 was a tariff of 2.24c per pound upon 96° test raw sugar and 3>^c per 
pound upon refined. In 1891 raw sugar admitted free of duty and the duty on refined reduced to ^c per pound. 
Price in 1890 was 6.27c per pound and in 1891 was 4.64;; price in 1910 was 4.972c per pound, which shows an 
increase in price between 1891 and 1911 of .332c per pound, or instead of decrease of i 4 - 7 %- Price in 

1911 was 5.345c, or .705c per pound above 1891, being over 15% increase instead of 14.7% decrease in 20 years 
in the United States. As there is no specific reference to the trend of the price of sugar in Canada, why was it 
mentioned at all? 

In Chart No. 19 comparison is given for United States wholesale prices for period 1900-1910. showing a 
decrease in the United States of only 7% instead of 14.7% between 1890 and 1910, as opposed to a reduction of 
15.8% in Germany and g.6% in Great Britain. United States price in 1900, 5.32c, next highest to 1890 between 
1890 and 1911. Price in 1911, 5.345c, which shows an increase even over high price of 1900 instead of de¬ 
crease, and is the highest point between 1891 and 1912. 

CHART No. 24 (Page 33). 

We are at a loss to appreciate what the cost of distribution of tea, coffee and sugar has to do with the 
tariff' on sugar, from either a revenue or a tariff-equalling-the-difference-in-cost-between-here-and-abroad stand¬ 
point, and we can only assume that this chart, like a great many others, has been prepared for the purpose of 
diverting attention from the real question at issue. 

It is a recognized fact that sugar has always been regarded by the wholesale and retail grocers as a 
“leader” and on this account has been sold at a narrow margin of profit in order to attract other trade. Sugar 
is a heavy staple and while it is not generally known, it is a fact that it constitutes about one-third of a grocer’s 
business. That is, a grocer who does, say, a $300,000 business a year, $100,ooo of it is in sugar. It is clear that 
on such a large volume of business the cost of distribution must necessarily be less than on tea or coffee. 

How absurd it is in a tariff discussion to compare t'le cost of distribution of sugar, the per capita consump¬ 
tion of which is 81.6 pounds with tea and coffee, the per capita consumption of which is .96 of a pound and 9.84 
pounds, respectively. 


CHARTS Nos. 25-26-27-28-29 (Pages 34 to 38). 

Why did Mr. Palmer conveniently single out the United States in order to make a comparison with Ger¬ 
many of the relative yields per acre of wheat, rye, barl.y and oats, and the percentage of increase over a period 
of years instead of the United Kingdom? It is well known that in the United States, on account of the unlim¬ 
ited area available for agriculture and the comparative .scarcity of labor, only extensive cultivation of the soil is 
indulged in; while in the United Kingdom and Germany, on account of the limited agricultural area available and 
the abundance of labor at hand, the exact opposite, or intensified farming methods, are practised. 

England cultivates no sugar beets, but by the application of intensified methods of farming forces her soils 
to yield 35 bushels of wheat, 30.8 bushels of ry ?, 38.9 bushels of barley and 45.9 bushels of oats per acre, in 
contrast to a German yield of wheat 30.5, rye 27 9, barley 39.5, and oats 59. In accomplishing this England 
indulges in the use of hoed-root crops in rotation, but does not find the sugar beet either necessary or indis¬ 
pensable to these results. England for fifty years and more has far exceeded Germany in yields per acre 
without the assistance of the sugar beet. If the sugar beet is responsible to the extent claimed, how does 
Mr. Palmer account for the superiority of the United kingdom in the yields per acre of wheat and rye 
over Germany, where the sugar beet is said to be used so extensively in an intensified way? Would the sum¬ 
mary of advantages and percentage of increases in favor of Germany be so marked in Chart No. 29 had Mr. 
Palmer selected the United Kingdom for the sake of illustration and comparison instead of the United States? 


“SUGAR AT A SECOND GLANCE” 


35 


Is it not rather a question of intensified farming than the use of the sugar beet that solves the problem of in¬ 
creased yields per acre? 


CHART No. 30 (Page 39). 

It is the custom of beet sugar factories when locating in territory to make some special arrangements with 
certain farmers (usually one or more in number) who agree to grow a relatively large amount of sugar beets, 
so as to insure the factory obtaining a certain supply. These were referred to by the beet growers who appeared 
before the Plardwick Committee as “decoy farmers,” the explanation being the factories would go to the other 
farmers in the vicinity and say “now that so and so has agreed to grow so many acres at a certain price; you 
should come in on this and grow five or ten acres (as the case may be) at the same price.” The so-called 

“decoy farmer” was naturally well versed in intensive ndtivation and secured the best results from his land 

and if the crop of the ordinary farmer did not produce such satisfactory results he was referred to the returns 
secured by the “decoy farmer” and was told that the fault was with him. 

It is clear that it is from this class of farmer that Mr. Palmer has secured the statistics that are presented 
in Chart No. 30 as the yields of 26.9 bushels of wheat, 41.6 of corn and 40.9 of oats and 38.97 of barley are 
above the United States average, so that the soils themselves or the manner in which the crops were cultivated 
tnust have been exceptional and by no means representative of the average. 

There never has been any question but that intensified farming produces more to the acre than the ex¬ 
tensive farming generally employed in the United States. The difficulty is that we have not yet reached a point 
where intensified farming is entirely practical because we have not the labor supply; gradually this will come, 
but no reasons have been presented to show why beet-sugar production by horticultural methods should be 

forced at the expense of other and equally desirable crops. 

I); 

There is no desire on the part of anyone to interfere with the legitimate growth of the industry. More¬ 
over, were the average yield per acre of wheat in the United States 26.9 bushels, in accordance with Mr. Palmer’s 
selection in order to illustrate the efifect of beet rotation in the United States, our average would be 5 bushels per 
acre above the average of France. Hence there would not be the occasion for that dreadful contrast between 
France and the United States in Chart No. 37, wherein it is shown that France on 16,253,000 acres raises 381,- 
227,000 bushels of wheat in contrast to a yield in Minnesota, North Dakota and Kansas of 178,339,000 bushels 
from 16,672,000 acres. If Mr. Palmer’s selection isirepresentative then these States would raise 448,376,800 
bushels of wheat instead of 178,339,000. 


CHART No. 31 (Page 40). 


Mr. Palmer’s figures do not seem to agree with the figures he gave on page 22, or with those of the 
Department of Agriculture. It would have been much better if in both cases he had adopted the figures of the 
United States Department of Agriculture, Bulletin 260, where we find the price paid for sugar beets in the United 
States from 1901 to 1912 to be as follows: 


1901- 2 . 

1902- 3 . 

1903- 4 . 

1904- 5 . 

1905- 6 . 

1906- 7 . 

1907- 8 . 

1908- 9 . 

1909- 10 . 

1910- 11 . 

1911- 12 . 

*No figures given. 


$4.50 

5-03 

4-97 

4 - 95 
5.00 
5.10 
5.20 

5 - 35 

* 

* 

5-50 


We have previously referred to the fictitious price of $6.00 per ton for 1909-1910 adopted by Mr. Palmer. 
It will be noted that the Department of Agriculture’s statistics show that the price in 1911-1912 had only reached 
$5.50 per ton. 













36 


“SUGAR AT A SECOND GLANCE” 


In speaking of this increase in the price paid for sugar beets Mr. Palmer is careful not to mention the 
increase in the sugar content of the beets, which is the basis of its value. It is the sugar in the beet that the 
factories are buying, and not the beets themselves. A comparison of prices and sugar content in 1898 with 1911 
will show that when the factory now buys a ton of beets it is i)aying 4 per cent, less for the sugar that is in those 
beets than it did in 1898. because the sugar content has increased to a greater extent than the price. 

A comparison of the fluctuating values of potatoes and sugar beets made in Chart No. 31 has nothing to 
do with the question of whether or not any tariff on sugar should be maintained and is undoubtedly introduied 
with the idea of diverting attention from the real question at issue. 

Mr. Palmer shows that there has been no sharp advance in the price of sugar beets as has been the case 
with potatoes in certain years, demonstrating the superior ability of the beet-sugar factories to hold in check the 
ever-present demand of the farmer for higher prices for his sugar beets. 

CPI ART No. 32 (Page 41). 

The United Kingdom, where intensified farming is indulged in, but no sugar beets grown, yields 38.9 
bushels of barley per acre, as compared with Germany’s 39.5. As barley is used extensively in the production of 
the malt from which is brewed the celebrated German beers, more than usual care is exercised in its cultivation. As 
contrasted with a United States average of 24.3 bushels per acre, other countries where the sugar beet is culti¬ 
vated on relatively as large a scale as Germany, display the following yields per acre: Plungary 25.1, France 
26.2, Austria 28.2. 

The yield of wheat in England, where no sugar beets are grown, is 35 bushels per acre, in contrast to a 
German yield of 30.5. Yield in the United States 15.8, in contrast to 14.1 in Hungary, 19.9 in Austria and 21.9 
in France. What comfort does Mr. Palmer derive from these figures and comparisons? If the sugar beet is 
responsible for the results, why do not France, Austria and Hungary show relatively as large yields as Germany, 
and why should England, where no sugar beets are grown, produce five bushels to the acre more of wheat and 
about the same number of bushels of barley to the acre as Germany? Why should not the German average 
equal the Belgian, if the sugar beet alone is responsible? As a matter of fact Belgium has to resort to intensified 
methods of farming over her limited, crowded agricultural area in order to provide for her population, which 
averages 300 persons per square mile. She has the labor, the lack of which is the main drawback in the 
United States to intensified methods of farming. 

CHART No. 33 (Page 42). 

The German average of 59 bushels of oats to the acre is taken for the year 1909, the highest ever attained 
in Germany, to he compared with an average in the United Kingdom for that year of 45 9 bushels per acre. Now 
the average in Germany between 1902 and 1911 was 51.5 bushels, of England 44.7 bushels. The German yield of 
rye was 27.9 bushels and United Kingdom 30.8. Since Hungary, France and Austria are considerably below the 
average yield in Germany in both instances, does not the comparison between the United Kingdom and Germany 
tend to prove that something more than the cultivation or rotation of the sugar beet crop in connection with 
these cereals is responsible for the yield and that it is rather a question of intensified methods of farming than 
the presence of sugar beets? In this and the preceding chart Belgium without particular regard to the use of 
the sugar beet shows what can be accomplished by intensified methods of farming. Her yields far exceed Ger¬ 
many or even England. This is due to the fact that she is populated to the extent of 300 people per square 
mile and hence is compelled to force the maximum yields by intensified methods of farming over her lim¬ 
ited area in order to support and feed her population. 

CHART No. 34 (Page 43). 

Why not take the United Kingdom where the same methods of agriculture are practiced for the sake 
of comparison with Germany instead of the United States, where these methods are impossible, and then make 
a comparison of the results? It is not very likely upon a relative basis of comparison the discrepancy would 
have seemed so pronounced in favor of beet culture. 

It is here stated “Wherever possible the farmers of Germany grow sugar beets in rotation with cereal 
crops.” Yet these comparisons assume that the whole acreage of Germany planted to cereals and potatoes has 
been rotated (one year in four) in connection with the cultivation of sugar beets, instead of “wherever possible.” 


“SUGAR AT A SECOND GLANCE” 


37 


If 42,776,000 acres rotated in sugar beets one year in four, then at least one-fourth of this area, or 10,694,- 
000 acres, are yearly cultivated to sugar beets. But as a matter of fact less than 1,250,000 acres are devoted to 
the cultivation of sugar beets in Germany, so it is apparent that Mr. Palmer’s claim that the high yields of other 
crops in Germany is due solely to rotation with sugar beets one year in four is entirely without foundation, 
in fact. 

Mr. Palmer calls attention to the fact that the combined acreage of wheat, rye, barley, oats and potatoes 
in the United States in 1907 was 88,546,000 acres and states that one-fourth of this land should be devoted to 
sugar beets each year in order to “double the yield of cereal crops in the United States, double the stock-carry¬ 
ing capacity of farms, and check the rise in prices.” One-quarter of this area in the United States would be 
22,136.500 acres, which, based on our present production would produce 26,563,800 tons, as compared with the 
world’s present production of beet and cane sugar of 15,863,589 tons. 

To cultivate sugar beets requires a great deal of hand labor and there is not sufficient labor in the United 
States for our present requirements. Aside from other considerations, where does Mr. Palmer expect to get 
the necessary labor to put his theories into practice and where will he find a market for this immense amount of 
sugar ? 

These points, however, are of minor importance. Mr. Palmer’s main object is to impress Congress with 
the advisability of maintaining tbe present “pork-barrel” rates on sugar, so that the promoters of the beet-sugar 
factories and land companies may continue to reap excessive profits at the expense of the x'Vmerican consumer. 

CHART No. 35 (Page 44)- 

Again we suggest a comparison between the crop averages of the United Kingdom, where no sugar beets 
are raised and Germany where sugar beets are extensively and intensively cultivated, in order to arrive 
at a fairer comparison than with the United States. S ich a comparison will explode the theory here advanced 
that sugar beets are necessary in order that increased yi.lds of other crops may be secured. On account of the 
limited area for cultivation in proportion to population, as compared with the United States, the United King¬ 
dom, like Germany, indulges in intensified methods of farming that are not resorted to in the United States. 

CHARTS Nos. 36, 37 and 38 (Page 45). 1 

As there is no beet sugar factory in North Dakota and but one in both Minnesota and Kansas, how many 
factories would it recpiire to produce result claimed? It now requires 76 factories to take care of the produc¬ 
tion from 474,000 acres. If rational beet sugar rotation in connection with sugar beets means planting to sugar 
beets one year in four, one-fourth of the area of Minnesota (5,200,000 acres), or 1,300,000 acres would have to 
be cultivated to sugar beets annually. This would be 2.74 times the present area now cultivated to sugar beets 
in the whole United States, and would require 200 beet sugar factories in Minnesota alone. Upon the same 
basis for Minnesota, North Dakota and Kansas, one-fourth of 16,672,000 acres, or 4,143,000 acres annually would 
have to be cultivated to sugar beets, which would require 639 beet sugar factories in these States alone, in 
contrast to only two that now exist. Could these States or the United States support this number of factories? 
According to the representations made by IMr. Palmer this must be accomplished before the “indirect benefits” 
accrue to the farmer. 

CHART No. 39 (Page 46). 

The total area now cultivated to sugar beets in the United States is 474,000 acres. In order to equal or 
exceed the crop yields of Germany, which Mr. Palmer claims are due to the rotation with sugar beets one year 
in four, he advocates culti\'ating to sugar beets iqion lie same theory of rotation the 85,546,000 acres now 
])lanted to cereals and potatoes in the United States. This would mean that every year one-fourth of this area 
should be cultivated to sugar beets, or 21,386,500 acres. The 474,000 acres now cultivated to sugar beets produce 
over 600,000 tons of beet sugar. Were the cultivation increased to 21,386,500 acres upon the same basis of in¬ 
crease in production it would amount to 27.000,000 tons of beet sugar per annum, or over 45 times as much. 
To take care of this increase in production 45 times the number of the present factories (76) would have to be 
erected, or 3.420 factories, and upon tbe present basis the cajiitalization of the beet sugar companies necessary 
to erect these factories and take care of the increase in [iroduction of sugar beets would be $6,390,000,000, or 45 
times $142,000,000. In his “vision” Mr. Palmer is not troubled by the practical question of how the above 
mentioned details would be taken care of, or how this increased production, amounting to 27.000,000 Tons, or 


38 


“SUGAR AT A SECOND GLANCE” 


times the present world's production of both cane and beet sugar, would be marketed. Certainly under 
these conditions beets would be worth so little that we presume the farmer would have to rely entirely on 
“indirect benefits” for his gain? Of course, there would be no trouble in disposing of this increase in production 
and the farmer would receive the same price for his beets that he does now? Neither would the farmer have the 
least difficulty in procuring the necessary help or be under any additional expense? All he would have to do 
would be to sit back and collect $1,376,915,000 more a year than now, according to this “dream”? 

Now, if Mr. Palmer’s theory is correct that Germany owes her increase in crop yields to the extensive 
cultivation of the sugar beet in rotation every fourth year with other cereals, it must be true that her 42,776,- 
000 acres scattered over the whole empire have at some time or another been grown to sugar beets and that 
factories have been erected in the vicinity of all these lands, in order to take care of the product. In order to 
carry out the rotation theory one year in four, at least one-fourth of this area would have to be grown in sugar 
beets each year or lose the benefits of the rotation process. Upon the basis of production in the United States, 
this would mean 12,825,000 tons of beet sugar in Germany per year, as against their present maximum produc¬ 
tion of 2,800,000 tons. It would be impossible to account for beet sugar cultivation or rotation one year in 
four as responsible for the increased yield of crops without the above results. This not being the actual case 
in Germany, is it not more sensible and logical to ascribe these increased yields rather to intensified methods of 
farming and cultivation in general than solely to beet sugar cultivation which only extends over 1,247,000 acres 
in 1912 and not the necessary 10,694,000 acres of Germany so as to be rotated one year in four in connection 
with other crops? According to the testimony of Fred. R. Hathaway at the hearings on the Sugar Schedule 
before the last Senate Finance Committee, the actual area planted to sugar beets in Germany averaged 1,107,000 
acres for the years 1909, 1910 and 1911. According to the statistics of the German Empire it was 1,247,213 
acres for the year 1912. 

CHART No. 40 (Page 48). 

The possibilities of accomplishment seem too remote and the benefits too “indirect” for even our imagi¬ 
nation to follow, along the lines of the workings of Mr. Palmer’s mind in this Chart. 

CHART No. 41. 

Mr. Palmer would like to have us infer from the fact that we exported less food stuffs, beef and 
pork in 1910 than we did in 1900 that therefore the production of food stuff's and the supply of cattle 
and swine had decreased. This falling oft' is mainly due to increase in home consumption, due to the natural law 
of supply and demand. We have increased in population 15,000,000 in these ten years. Also there has been a 
large increase in the domestic price in comparison with the export that keeps these commodities at home. Besides, 
in consequence of the high prices at home the farmers have shown a tendency to increase the stock carrying 
capacity of their farms, as will be demonstrated by the following comparisons between the two years. In 
1900 there were in the farmers’ hands 44,002,000 cattle valued at $1,204,298,000 and 37,079,000 swine valued 
at $185,472,000. In 1910 there were 69,080.000 cattle valued at $1,697,771,000 and 47,782,000 swine valued 
at $436,603,000. The average price per head of cattle in 1900 was $28.28 and in 1910 $27.60; for swine $5.00 
in 1900 and $9.14 in 1910. So there was an increase in the stock carrying capacity of farms in the United 

States in 1910 over 1900 in the number of cattle of 25,078,000 valued at $493,473,000 and an increase in the 

number of swine of 10,703,000 valued at $251,131,000. Our yield of wheat in 1900 was 522,230,000 bushels 
valued at $323,515,000, and in 1910 635,121,000 bushels valued at $561,051,000, an increase in production of 
112,891,000 bushels and an increase in value of $237,546,000. though there was a falling off in exports of 
30.5%, due more than likely to a difference in the farm value of 6r.9c per bushel in 1900 as against 
88.3c in 1910. Our yield of corn in 1900 2,105,300,000 bushels valued at $751,220,000 and in 1910 was 2,- 
886,260,000 valued at $1,348,817,000, or an increase in production in 1910 over 1900 of 780,960,000 bushels 
valued at $633,597,000 and a falling oft* in exports of 4-3%, perhaps to a difference in price of 35.7 in 
1900 as against 48c in 1910. The secret is that the United States no longer has a surplus for export due 
to the increased domestic demand and the attractive dunestic price, as compared with export. The mere 
fact that there is a falling off in exports proves nothing. As a matter of fact there has been an increase 
in everything, including the stock carrying capacity of farms; yet there has been no decrease in prices, 

but a steady increase. Moreover, there has been an increase in the production of beet sugar in the 

United States between 1898 and 1913 of 600,000 tons and during that same period of growth and exten¬ 
sion of the beet sugar industry there has been an increase in the price of wheat of 30c per bushel, an 


“SUGAR AT A SECOND GLANCE” 


39 


increase in the price of cattle $2.50 per head and $4 per head in swine. If the cultivation of the sugar 
beet is to contribute to the solution of the high cost of living by reducing prices by increasing crops 
and stock carrying capacity of farms, it seems to have failed so far in the United States. 


PAGE 50. 

“THE BLIGHTING EFFECT OF CUBAN RECIPROCITY ON THE DEVELOPMENT OF THE 

AMERICAN BEET SUGAR INDUSTRY.” 

We submit herewith a complete list of the beet sugar factories in the United States, together with their 
daily slicing capacity and the capitalization of the various companies who operate them. 


Name of company. 


Capitalization 

Location of plants. (including 

bonded debt). 


Alameda Sugar Co. 

Anaheim Sugar Co. 

American Beet Sugar Co. 

Amalgamated Sugar Co. 

Billings Sugar Co. 

Continental Sugar Co. .. 
Corcoran Sugar Co. 


Great Western Sugar Co. 


German-.^merican Sugar Co. 
Holland-St. Louis Sugar Co. 


Holly Sugar Co. ... 

Iowa Sugar Co. ... 
Lewiston Sugar Co. 
Los Alamitos . 


Michigan Sugar Co. 


Menominee River Sugar Co. 

Minnesota Sugar Co. 

Mount Clemens Sugar Co. . 

Chippewa Sugar Co. 

Nevada Sugar Co. 

Owosso Sugar Co. 

Pope, Charles . 

Rock Country Sugar Co. 

Sacramento Valley Sugar Co, 
Santa Ana Cooperative . 


Alvarado, Cal. 

Anaheim, Cal. 

f Oxnard, Cal. 

I Chino, Cal. 

I Lamar, Colo. 

■{'-as Animas, Colo. 

I Rocky Ford, Colo. 

( jrand Island, Neb. 

f Ogden, Utah . 

■{ Logan, Utah . 

I [Burley, Idaho . 

Billings, Mont. 

f Fremont, Ohio . 

•{ Findlay, Ohio . 

(_ Blissfield, Mich. 

Mrcoran, Cal. 

..oveland, Colo. 

Greely, Colo. 

Eaton, Colo. 

Fort Collins. Colo. 

■! .ongmont. Colo. 

1 Windsor, Colo. 

I Sterling, Colo.. 

I Brush, Colo. 

' I Fort Morgan, Colo. 

f Paulding, Ohio . 

I 

[ Bay City, Mich. 

( Holland, Mich. 

■{ St. Louis, Mich. 

[ Decatur, Ind. 

[ Swink, Colo.. 

-! Holly, Colo. 

1 i Huntington Beach, Cal. 

Waverly, Iowa . 

Lewiston, Utah . 

, Los Alamitos, Cal. .... 

f Bay City, Mich. 

I Caro, Mich. 

I Alma, IMich.. 

, ■{ Sebewaing, IMich. 

I Carrollton, Mich. 

[ Crosswell, Mich.. 

Menominee, Mich. 

. Chaska, Minn. 

, Mount Clemens, 

, Chippewa Falls, 

. Fallon, Nev. .. 

f Owosso, Mich. 

. ■! 

1 [ Lansing, iMich. 

. Riverdale, Ill. . 

. Janesville. Wis. 

. Hamilton City, 

. Dver, Cal. 


Mich. 
Whs. , 


Cal. 


$1,500,000 

850,000 


20,000,000 


4,000,000 

1,250,000 


2,400,000 

1,200,000 


30,000,000 


2,000,000 


3,300,000 


5,500,000 


550,000 

1,200,000 

1,000,000 


$12,500,000 


825,000 

1,200,000 

6oo,oco 

700,000 

1,000,000 

2,300,000 


500,000 

800,000 

2,210,000 

1,000,000 


Daily 
slicing 
capacity. 
Tons. 
750 
750 
2,000 
700 
400 
800 
1,000 
400 
500 
500 
500 
1,650 
r 500 

600 
i 700 

600 
1,800 
900 
1,000 
1,800 
1,800 
900 
800 
900 
700 
900 

1,400 
500 
■j 600 

[ 1,000 

f 1,200 
600 
[ 600 

500 
650 
900 

r 1,300 

I 1,200 

I 850 

1 600 

I 900 

[ 600 

1,000 
600 
600 
600 
600 
f ] ,000 
■! 

[ 600 

600 
600 
700 
600 























































































40 


••SUGAR AT A SECOND GLANCE” 


Name of Company. 


San Joachim Valley Sugar Co. ... 

Scottsblufif Sugar Co. 

National Sugar Manufacturing Co. 

San Luis Valley Sugar Co. 

Southern California Sugar Co. .. 

Spreckels Sugar Co.. 

Toledo Sugar Co.. 

Union Sugar Co. 

United Sugar & Land Co.- 


LTah-Idaho Sugar Co. 


Southwestern Sugar & Land Co. 

United States Sugar Co. 

Washington State Sugar Co. .. 

West Bay City Sugar Co. 

West Michigan Sugar Co. 

Western Sugar & Land Co. 

Wisconsin Sugar Co. 

Western Sugar Refining Co. ... 

Total . 



Capitalization 

Daily 

Location of plants. 

(including 

slicing 

bonded debt). capacity. 

Tons 

Visalia, Cal. 

1,225,000 

350 

Scottsblufif, Neb. 

1,200,000 

1,200 

Sugar City, Colo. 

1,500,000 

5 CO 

iVlonte Vista, Colo. 

1,500,000 

600 

Santa Ana, Cal. 

1,000,000 

750 

Spreckels, Cal. 

5,000,000 

3,000 

Rossford, Ohio . 

1,000,000 

1,200 

Betteravia, Cal. 

3,000,000 

800 

Garden City, Kans. 

8,000,000 

900 

Lehigh. Utah . 


1,200 

Garland, Utah . 


750 

Austin, Utah . 


500 

■j Idaho Falls, Idaho . 

1 11,000,000 j 

750 

Sugar, Idaho . 


800 

Blackfoot, Idaho . 


650 

Nampa, Idaho .. 


600 

Glendale, Ariz. 

3,400,000 

600 

Madison, Wis. 

550,000 

600 

Waverly, Wash. 

500,000 

500 

West Bay City, Mich. 

200,000 

900 

Charlevoix, Mich. 

350,000 

600 

Grand Junction, Colo. 

2,000,000 

500 

Menominee Falls, Wis. 

1,500,000 

600 

IMarine Citv, Mich. 

100,000 

550 


$141,410,000 

63,550 


From this list it will be seen that the total number of beet sugar factories is seventy-six, of which sev¬ 
enteen are located in Colorado, sixteen in Michigan, thirteen in California, six in Utah, five in l)oth Idaho 

and Ohio, four in Wisconsin, two in Nebraska and one each in Montana, Minnesota, Kansas, Iowa, Illinois, Indi¬ 
ana, Arizona and Nevada. Were this number augmented to the extent of the plants said to be abandoned in 

the list su])mitted on this page then there would be located altogether in the above states the following 

number of factories: Michigan, 40; Colorado, 22; California, 18; Wisconsin, 17; Utah, 9; Ohio and Iowa, 7 
each; Idaho and Minnesota 6 each; Arizona, Nebraska, North Dakota. Montana, New York, South Dakota, 
Indiana and Wyoming 2 each, and one in each of the states of New jersey, Oregon, Nevada and Pennsyl¬ 
vania, making 152 beet sugar factories in all. If all of these projected factories had been realized, $58,000,- 
000 would be added to our present beet sugar capitalization of $142,000,000, making a total beet sugar 
capitalization of $200,000,000. However, did they :apitalize on the basis of the beet sugar companies 
now in existence, to wit, $2,458 per ton of daily slicing capacity, instead of on the normal basis of $1000 
per ton the total capitalization of the new factories would be $120,422,000, which would make a total beet 
sugar capitalization of $262,442,000. Except for these 152 factories we have no data for the balance of the 
355 factories, said to be projected and abandoned l)etween 1898 and 1911. Suffice to observe that if 

they were realized and put in operation Michigan, Colorado, California, Utah and Idaho, where the desir¬ 

able, profitable and easily irrigated beet sugar lands are located would be called upon to bear the brunt of 
the increase, and the beet sugar companies located in these various states in which the trust is so heavily 
interested would be called upon to meet the demoralizing competition of such an increase. Instead of an 
annual beet sugar ])roduction of 700,000 tons there would be an increase to 3,500,000 tons, which would 
be about sufficient to supply the whole of the United States without taking into consideration the 1,200,000 
tons of cane sugar now supplied by Louisiana, Hawaii, Porto Rico and the Philippines. Upon the present 
basis of capitalization the 419 projects spoken of by Mr. Palmer would be capitalized at $781,000,000. Even 
in the al)sence of “tariff agitation and enactments,” some difficulty would lie experienced in attempting 
to make profits sufficient to pay dividends upon such an amount. W^e desire to o1)serve that instead of 419 
factories that Mr. Palmer speaks of as projected l)etween 1898 and 1911, according to his representa¬ 
tions in Chart No. 42 under the heading of “New Factory Projects,” the total num 1 )er appears to be 

728 instead of 419. Surmounting all difficulties, and for the sake of argument admitting the possibility of this 

accomplishment we find that the farmer’s hope of “indirect benefits” so graphically depicted by Mr. Palmer 
have no chance of realization as these projects would utterly fail to take care of rotation of available lands to 
sugar beets one year in four in these respective States. 



















































“SUGAR AT A SECOND GLANCE" 


41 


But aside from “tariff agitation and enactments" and the so-called “blight of Cuban Reciprocity," 
let us see whether or not the realization of these factories has not been circumvented by other and 
more probable means. 

In the suit now pending by the Government to dissolve the American Sugar Refg. Co., as a trust 
and monopoly m restraint of trade, .\Ir. Chester S. Morev, President of the Great Western Sugar Co,, 
■of Colorado, gave the following testimony, regarding the erection of more sugar beet factories in Colorado, 
in answer to this question by Mr. Knapp; 

Mr. Knapp: What I am asking you is whether prior to the commencement of this suit and the pres¬ 
ent tariff agitation you had not already taken the position that you are opposed generally to the invest¬ 
ment of any more money in beet sugar in Colorado? 

Answer by Mr. Morey; I think I have taken the position that we have all the factories in Colorado 
we ought to have—all that the country zvould support. 

X’olume 2. page 874 of testimony in United States V. The American Sugar Refining Company, 

et al. 

(As the acreage of Colorado is not now grown to sugar beets one year in four, it appears that the 
farmers can never realize the indirect benefits so alluringly pictured by Mr. Palmer.) 

In order to show the disposition of the American Sugar Refining Company, of Trust, toward the 
erection of independent beet sugar factories in their exclusive territory and to illustrate how its attitude 
has been responsible for the abandonment of a great many projects we submit the following letters from 
the records of the testimony in the above case. 

THE GREAT WESTERN SUGAR COMPANY 

Denver, Colo., June 8th, 1906. 

Mr. H. O. Havemeyer, 

New York, 

Dear Sir: The enclosed letter from Mr. Boettcher e.xplains itself. Would like to know if you see 
any way to check this kind of competition. I sometimes think it is a mistake not listing our stock and 
offering it for sale; if people zvant to buy coinuion stock zve ought to give them a chance to come in. This is 
simply a suggestion. WY are doing everything we can to discourage the building of any more factories 
until the matter of tariff legislation is more settled than it is at present. WY are using that as a basis 
of argument against the building of any more factories. 

Promoters like the Garden City and the Sheridan people are claiming that trusts have made great 
profits out of the business and in that way selling their stock. 

Respectfully yours, 

C. S. MOREY. 

The letter of Mr. Boettcher referred to above: 

THE GRE.-VT WESTERN SUGAR CO. 

Denver, Colo., June 27th, 1906. 

My dear Mr. Morey; I had an interview today with the Colorado Springs people in reference to their 
contemplated factory to be built at Sheridan, Wyoming. 

Sheridan is situated on the Burlington route, a distance of 140 miles from Billings. If this factory 
is built, of course, they will come in direct competition with our local points of the Billings factory. I was 
in hopes that I would be able to have these Colorado Springs people take an interest in our Billings 
factory and keep them from building this contemplated plant, but I fear I will not be able to do anything 
with them, as they tell me they have sold their common stock of the Garden City plant, which they 
are now building at $50 per share and upwards. They frankly admit that this common stock is all water 
and does not represent anything, that is the way they are making their money. They feel they can do the 
same thing in Sheridan and claim they have a ready sale for their common stock. Most of their stock is 
sold. They also expect to make a large profit on land they have purchased and expect to build a number 
of ditches and sell out the land at a large profit. 


42 


“SUGAR AT A SECOND GLANCE” 


There is nothing I can say to them that would be attractive enough for them to discontinue their 
building the Sheridan factory and I fear they will build a plant to be ready for the crop of 1907 - ihe 
promoters of the scheme put in very little money of their own as they seem to have the faculty of having 
their people put up the money and they are getting the benefit of the common stock for themselves. 

I understand Mr. AIcKinnie is going to Sheridan latter part of next week and as I expect to go to- 
Billings about the fifth of next month will stop off at Sheridan and look over the territory and if there is 
anything more I can do with these people to keep them from building a factory I will do so, although I have 
very little hopes. 

I am just calling your attention to these items so you will know they raise the money for their new 
factories. 

Very truly yours, 

C. BOETTCHER. 


Mr. C. S. Morey, 

Denver, Colo. 


The Mr. McKinnie referred to in the above letter is J. R. McKinnie of Colorado Springs, Colo.,, 
who promoted the United States Sugar and Land Co., with a beet sugar factory at Garden City, Kansas,, 
with a daily slicing capacity of 900 tons. The company itself is capitalized for $8,000,000, though this factory 
represents an investment of but $900,000, which indicates that its main purpose is to promote and specu¬ 
late in the sale of so-called beet sugar lands. Mr. McKinnie was the original promoter and first president 
of this Company and had associated with him a number of capitalists from Colorado Springs, Colo., in 
whose control this company now is, though Mr. McKinnie is not active in this particular one, as he 
has organized two other beet sugar land companies, and is president of the Western Sugar and Land Co., 
with a capital of $2,000,000, and a beet sugar factory at Grand Junction, Colo., of 500 tons daily slicing capac¬ 
ity and \uce-President of the Southwestern Sugar and Land Company, with a capital of $3,000,000, a 
bonded indebtedness of $400,000, and a beet sugar factory at Glendale, Arizona, with a daily slicing 
capacity of 600 tons. Mr. McKinnie has been the moving spirit and promoter of all of these beet sugar and 
land companies and has at one time or another been president of all of them and has had associated with 
him in these enterprises practically the same group of capitalists from Colorado Springs, including such 
names as C. M. MacNeil, president of the United Sugar and Land Co.; R. P. Davie, President of the South¬ 
western and Vice-President of the Western Sugar and Land Co.; C. C. Hamlin, Vice-President of the United 
States Sugar and Land Co., and H. D. Haskins, second Vice-President; Kieth Steward, third Vice-President r 
F. A. Gillespie, Secretary and Treasurer, and Spencer Penrose, Secretary of the United States Sugar and Land 
Company; Chester M. Curtis, Secretary of the Southwestern, and a Mr. Sharer, Secretary and Treasurer of 
the Western Sugar and Land Company. Mr. C. Boettcher, who is responsible for this letter and expressed the 
opinion about the value of common stock and the speculative nature of the enterprises in which Mr. McKinnie- 
was interested, is now Vice-President of the Great Western Sugar Co., of Colorado. 


W'^e submit here another letter which explains itself: 

February 27, 1905. 

Mr. T. R. Cutler, 

Salt Lake City, Utah. 

Dear Sir: Referring to yours of February 21st, bearing upon Boutelle and his projects I wired you 
to buy a tract of land in any town where Boutelle or his crowd buys one with a view and determination of 
huilding a competing factory. Boutelle is a very unreliable man; he represents a very unreliable crowd and 
he is in it for the commission which the promotion gives him. He can be very easily knocked out. 

If any territory about us is suitable and ready for a factory we should be on the alert and provide it 
and if you find any company having bought a tract of land in view of building a factory, do not hesitate 
to buy a tract in the same place and let the people understand that we are in earnest. 

You should have an active man following him and his crowd up. Outside of the promotion feature 
they have no interest whatever, and so many of their enterprises have proved unsuccessful that it would 
be an advantage to the community to knock them out. 

Yours truly 


H. O. HAVEMEYER. 


“SUGAR AT A SECOND GLANCE” 


43 


What chance of success would an independent factory have in attempting to prevail against such 
methods of retaliation for trespassing upon Trust territory in Utah? 

Extract from letter of C. Boettcher to C. S. Morey: 

THE BILLINGS SUGAR CO. 

Mr. C. S. Morey, 

Harbor Springs, Mich. Denver, Colo., Aug. 27th, 1906. 

Dear Sir: * * * j tried to arrange with Mr. Cutler to have him agree to stay out of Montana 

points and we will stay out of Idaho, but he seems to think there are so few places in Idaho that we can 
reach that he would not agree to that, but they have agreed to stay out of places where our rate is less than 
theirs. I have also called on Mr. Eccles, in reference to his building a factory in Bozeman. Mr. Eccles, 
however, did not return to meet my appointment, but I met Mr. Rolapp and we talked the matter over and 
they seem to calculate to build a factory at Bozeman. I explained our side of the case very fully, 
stating that everything was very high in Montana, that labor was exceptionally high and if we had to 
make sugar at the Montana points to be shipped to Missouri River it certainly would be a losing scheme 
as it would cost considerably more to make sugar in Montana than it would in Utah or Colorado, and our 
factory was large enough to supply all the local territory. He seemed to realize that fact and made a 
statement that they had not looked at it in that light and it was a new point to be brought up and agreed 
that as soon as Mr. Eccles returned he would take it up with him and would probably see us before they 
would do any work. 

Now it seems to me foolish for our people in New York to agree to take a half interest with Mr. 
Eccles and come into direct competition with the Billings factory. Our people in New York should take the 
stand and stay with it, not to put a dollar into these factories and I feel satisfied that Mr. Eccles will not 
build this factory if our New York people take that stand. * * * 

\^ery truly yours, 

C. BOETTCHER, 

President. 

David Eccles was the organizer and President of the Amalgamated and Lewiston Sugar Companies of 
Utah, in which the Trust owned a half interest. He was induced to abandon the Bozeman factory. 

Extract of letter of Thomas R. Cutler to H. O. Havemeyer: 

Thomas R. Cutler, 

Salt Lake City, April ii, 1905. 

H. O. Havemeyer, Esq., 

117 Wall St., New York, N. Y. 

Dear Sir: * * =!= Referring now to the question of Western Idaho I informed you that Bou- 

telle and Hoover had been operating in the vicinity of Payette and it was with extreme difficulty I was 
able to overcome their operations. After they decided to move their operations they went on to the 
vicinity of Nampa and tried to get in there, but I had forestalled them. There were also other parties 
operating in that field, and I have been working for the last thirty days to get these matters adjusted so 
that we could control the situation because these people were offering $5 for beets and it would have upset 
our entire Idaho operations. * * * 

Yours very truly, 

THOMAS R. CUTLER. 

General Manager. 

The testimony in this suit abounds in letters showing how the trust discouraged and forestalled 
the erection of beet sugar factories at Blackfoot, Idaho, Sheridan, Wyoming, Bozeman, Mont., and in numer¬ 
ous other places in Utah, Idaho, Colorado and Montana. 

We submit that the companies already organized in the above beet sugar district would not welcome 
any further competition and are not so anxious for the development of the beet sugar industry at home 
by others as they appeared to be when in Washington. 


44 


“SUGAR AT A SECOND-GLANCE” 


CHART No. 42 (Page 49). 

In this Chart, Mr. Palmer seeks to convey the impression that the beet sugar industry actually orig¬ 
inated in the year 1896 so as to attribute its subsequent growth and development to the beneficent effects of the 
Dingley Bill of 1897, in which the present high rates of duty were fixed. As a matter of fact, the industry 
really began in 1890 and has never attempted to be self-supporting. As far back as 1890 it was subsidized by 
the Government to the extent of 2c per pound as well as paid a bounty in many of the States in which it oper¬ 
ated. About the time these bounties and subsidies were abolished, a duty of 40% ad valorem was imposed 
for its benefit and protection. During the period between 1890 and 1896 seven factories si)rung up. 

During the fourteen years, between 1890, the time of its origin, and 1904, when "the blight of Cuban 
Reciprocity” went into eff'ect, 43 factories had been erected, 40 of which survived. Between 1904 and 1913, a 
period of only nine years, 36 additional factories have been built, according to Willett Gray, and not 27, as 
stated by Mr, Palmer. As a matter of fact his own figures total 33. This reflects, relatively, a greater growth 
than during the fourteen years preceding this so-called "blight" of Reciprocity. During the years preceding 
this “blight” the total annual production of beet sugar had only grown to 240,604 short tons; between 1904 and 
1913 it has grown to 700,000 short tons, or nearly three times as much since Cuban Reciprocity, the so-called 
“blight.” Such progress does not indicate that it is interfered with by either “anticipated legislation” or the 
“trend of events” to the extent claimed by Mr. Palmer. 

Of the 76 beet sugar factories now in operation, the American Sugar Refining Co., or Trust, has been 
primarily responsible for the erection of 27. According to the opinion of Mr. Wallace P. Wdllett before the 
Hardwick Committee there would not be half the beet sugar factories in existence today were it not for the 
interest of the Trust in its development. This Trust is now interested in beet sugar companies that control and 
operate 36 factories. Since 1902, when it first began to invest in beet sugar companies, it has been responsible 
for 27 out of the 50 new ones erected in the United States. 

It was stated before the Hardwick Committee by the Hon. Joseph L. Fordney, Congressman from 
Michigan, that the fight against this "blight of Cuban Reciprocity” had been called off by the domestic beet sugar 
interests because the Trust had agreed to take an interest in their companies in the event that they would 
permit of legislation that would be favorable to Cuban Reciprocity. So despite “real or anticipated legislation” 
and "the trend of National events" the beet sugar industry has expanded from an annual production of 240,604 
short tons to 700,000 short tons in the nine years since this so-called “blight,” which would be regarded as ex¬ 
ceptional progress even under most favorable circumstances, and assuredly indicates a prosperity and expansion 
that no longer requires the encouragement of a high tariff. 

Nor is it at all likely, in view of their low cost of production, that these beet sugar factories will be 
turned into "scrap piles.” If it was it is apparent that we have been developing an “illegitimate industry.” 
If so, it is certainly time to call a halt as the consumers should not be saddled with an industry that for all 
time must sell its product at high prices. 

In 1898, Mr. William Bayard Cutting, one of the first in this country to engage in the production of beet 
sugar, stated over his signature “That the beet sugar industry is profitable under conditions of absolutely free 
trade, and that the United States, being an agricultural country, the industry has nothing to fear even from 
the annexation of Cuba.” 

PAGE 51. 

THE HIGH COST OF LIVING. 

In his calculations on this page, Mr. Palmer assumes the amount of sugar consumed by an average family 
of five persons in 1910 to be 299.6 pounds^ instead of 2'68.5 pounds, as inaintaiticd in Chart AO. 6, and, in his de¬ 
ductions regarding the annual cost of the Tariff to the consumer in Chart No. 7. Here the annual direct per 
capita consumption of sugar turns out to be 59.92 pounds instead of 53.7 pounds. Hence, adopting Air. Palmer’s 
revision of his former estimates, the cost per capita is increased from 72.28c, as stated in Chart No. 7, to 
80.65c, and, with the same amount deducted for revenue purposes, as in Chart No. 7, namely, 58.33c, the net 
annual cost to the consumer, by reason of the tariff*, amounts to 22.32c, instead of 13.95c, as represented in the 
latter Chart. 

Light seems to be dawning upon Mr. Palmer towards the close of his treatise. Doubtless, further inves¬ 
tigation and treatment of the subject would have resulted in further expansion and it is our hope that “SUGAR 
AT A SECOND GLANCE’’ will be of some assistance. But it does seem as though he should have corrected 
his first impressions and deductions so as to have them conform to his latest revelations on this page. 


“SUGAR AT A SECOND GLANCE” 


45 


BASIS OF COST AND CAPITALIZATION OF BEET SUGAR COMPANIES. 

\\’e have searched in vain for a Chart showing how the present tariff has enabled the domestic sugar 
industry to overcapitalize and to reap excessive profits at the expense of the American consumer. 

THE BASIS OF COST OF BEET-SUGAR FACTORIES. 

At the tariff' hearings, before the Payne committee of 1908-09, F. R. Hathaway, Secretary of the Michi¬ 
gan Sugar Company, estimated the cost of a beet-sugar factory investment on the basis of $1000 per ton, of 
daily slicing capacity. Tariff' hearings. Ways and Means Committee, Page 3292. Henry T. Oxnard, of 
The American Beet Sugar Co., made the same basis of estimate before the Hardwick Committee. Hard¬ 
wick Hearings, page 376. This was also the estimate of Charles Nibley, the promoter and organizer of 
the Amalgamated Sugar Co., of Utah. Hardwick Hearings, Page 1090. 

E. U. Combs, of Colorado, testified before the Hardwick Committee, of an estimate of $367,000 sub¬ 
mitted to him, for the erection of a beet sugar factory of 6od tons daily slicing capacity, which would be on the 
basis of less than $600 per ton, instead of $1000. Hardwick Hearings, Page 3283. 

Before the Hardwick Committee, Hon. Joseph L. Fordney, Member of Congress from Michigan, and 
a most uncompromising beet sugar advocate, made this admission: 

“I think, Mr. Chairman, we have it in evidence, over and over again, that the contract price is $1000 
per ton.” Hardwick Hearings, Page 3285. So the basis of cost of a beet sugar factory may, safely be 
said to be, no more than $1,000 per ton, of daily slicing capacity. 

BASIS OF CAPITALIZATION OF BEET-SUGAR COMPANIES. 

According to the Census Report of 1910, the combined daily slicing capacity of 68 beet-sugar fac¬ 
tories in the United States was 52,750 tons. On a basis of average cost this would permit of a capitali¬ 
zation of $52,750,000. These factories, according to the same Census Report, were capitalized for $129,629,- 
000, or 2j4 times their cost. These factories produced 457,000 tons of sugar. See “The United States Beet 
Sugar Industry and the Tariff,” by Professor Roy G. Blakely, of Columbia University, Table Page 51. 

According to the same authority the capitalization per ton of daily slicing capacity has been IN¬ 
CREASED FROM THE NORMAL BASIS of $1,097 IN 1889 TO $2,458 IN 1909. 

C A N E-SUG A R C A PIT A LI Z AT ION. 

In contrast to this Beet-Sugar inflation, the total capitalization of all Cane-Sugar Refining Companies 
approximates $153,000,000, allowing a valuation of $12,000,000 for the Co-partnership of Arbuckle Bros, 
and $1,500,000 for the Henderson Refinery of New Orleans. See Table Pages 136-137-138 of “The Petition 
of the United States of America vs. The American Sugar Refining Company and Others,” filed in the 
Circuit Court of the United States for the Southern District of New York. This total includes $3,500,000 
of stock of the American Sugar Refining Company of Nczu York, $5,000,000 of the Spreckels, and $5,000,000- 
of the Franklin of Philadelphia, and $5,128,000 of the National of New Jersey, all owned by the American 
Sugar Refining Company of Nezv Jersey, or Trust, for the purchase of which, a portion of its $90,000,000 of 
stock was issued. It also includes $15,000,000 of this $90,000,000 capital stock, issued in 1902 for the purchase 
of over $23,000,000 worth of stock in Beet-Sugar Companies. Subtracting these amounts (in order to arrive 
at a fair relative comparison), we find: 


Production Period of 

W. &G., 1911 Operation 

Capitalization Tons. Months. 

Total Cane, about.$120,000,000 2.745,000 12 

Total Beet . 143,000,000 506,000 3 


These Cane Refining Companies produced over five times as much as the Beet Sugar Factories. 

All of the larger Beet Sugar Companies now pay a dividend upon their common stock (which was 
originally added as a bonus). The Michigan Sugar Company now pays 7% upon their common as com¬ 
pared with 6% upon the preferred. In 1910 this Company had a surplus of $3,025,000, out of which it paid 
a stock dividend of $2,000,000, or 35%, and carried $1,025,000 to surplus. Its common stock was their 
quoted in Detroit at 121. It has a daily slicing capacity of 4,450 tons, and is capitalized for $12,500,000, or,. 




46 


•‘SUGAR AT A SECOND GLANCE” 


approximately, three times its cost. The American Beet Sugar Company up to last year paid 6% upon 
$5,000,000 of preferred stock only, and last year started in to pay 5% on $15,000,000 common. The year before 
it earned sufficient to pay 13^2% upon the common and the previous year 10^2%. The total daily slicing 
capacity of its cc^mbined factories is 5200 tons. It is cai)italized at $20,000,000, or at the rate of about four 
times its ct)st. Last year this company charged up over $751,000 to “depreciation, ’ or about 8_k2% of its 
earnings. Fhe Great ^\Tstern Sugar Company, of Colorado, pays 7% upon its.preferred stock and 5% upon 
its common. In 1910 it had a cash surplus of $5,500,000. It has a daily slicing capacity of ^,700 tons and 
is capitalized for $30,000,000, or at the usual rate of more than three times the cost of its factories. 

This interesting and illuminating letter, in regard to the affairs of the above company, was written by 
its President, Chester S. Morey, on March 19, 1910, to W ashington B. Thomas, who was then President of 
the American Sugar Refining Company; 

“My dear Mr. Thomas: Enclosed herewith I hand you copy of the financial exhibit and income state¬ 
ment. This is the form in which we expect to publish these statements, and they will also be used when we 
make application to list our stock on the New York Exchange. 

“You will notice that this year, in addition to the regular 2)^2% depreciation which we have been de¬ 
ducting for the last three years, we have set up $1,000,000 in depreciation reserve. I do not zvant this year’s 
earnings to appear as large as they zvould if zve had not made this entry. Of course, this can be changed 
if the board of directors does not approve of it. 

“You will note that our total surplus is shown by these statements as a little over $5,000,000. This does not 
include any surplus from the Billings Co., the Great WYstern Railway Company and other corporations, 
which really add nearly $2,000,000. 

“Our sugar is invoiced at 4 cents and judging from present market indications there is at least 
$1,000,000 profit that will show up in next year’s business. The value of our real estate and railroads over 
and above the amount at which they are carried is at least $5,000,000, so that the actual surplus is nearer 
$9,000,000 than $5,000,000. 

“Am pleased to say that at some of our factories the farmers are signing up acreage and feel more en¬ 
couraged than I did a week ago. 

“The details of these statements I will bring with me when I come to the stockholders’ meeting.” 

Owing to the high price of sugar, the year following the date on which this letter was written 
was, unquestionably, even more profitable to the Great W'estern Sugar Co. than any of the preceding years, 
which seem to have yielded abnormal profits, as this company, only organized in January, 1905, had, by 
March 19, 1910, accumulated a surplus of $9,000,000, in addition to having paid regular yearly dividends. Yet 
these are the “interests” who whine at the doors of Congress in Washington that “ruination” stares them in the 
face if the Tariff on sugar is reduced! 

The Beet Sugar Companies are enabled to do this, because they are not obliged to base their selling 
price, to the consumer, upon their cost of production ( which is around 3c per pound) in contrast to Eastern 
Cane Refiners’ average of more than 4)4c per pound (a full ij^c of which is due to the tariff). Thus the 
beet sugar companies capitalize their cheaper cost of production, freight and Tariff protection, at the ex¬ 
pense of the consumer, with no thought of sharing any advantage with the farmer. THE SUGAR BEET 
COMPANIES DEAL WITH THE LATTER UPOR A FREE TRADE BASIS, FOR HIS BEETS, 
AND CHARGE THE CONSUMER UPON THE HIGHEST PROTECTIVE BASIS, FOR THEIR 
PRODUCT. Hence, little sympathy should be wasted upon this Tariff-favored element, on account of the 
disposition shown, to exploit the benefits, so generously conferred at the expense of the public at large, 
whom Congress represents. ' 

We now propose to show that, the main use they make of Tariff concessions (which they should, 
in fairness, share with the farmer) is, to float zvatered stock and promote over-capitalisation, in their several 
companies. 

LOW'RY TARIFF PLAN. 

The present tariff on sugar enhances the price for the producers in Porto Rico, Hawaii and the Philippines, 
rso that the owners of the mills (who as a rule live in the States), are making an enormous profit at the expense of 


“SUGAR AT A SECOND GLANCE” 


47 


the American consumer, but the sugar industry in these islands, before they became a part of the United States, 
flourished under conditions of absolute free trade. 

It is, therefore, apparent that any tariff that we might have would enhance the value of the product of 
these islands by the amoiDit of the tariff, so that it is clear that any tariff means just so much extra profit to 
those engaged in producing sugar in these islands. 

The tariff rate we propose is ecpial to $io to $12 per ton. 

Let us now consider how our domestic beet sugar industry would fare itiider the rate zvhich zve propose. 

It is well known in the trade that where factorie are properly located and thoroughly equipped, there 
should be no difficulty in producing beet sugar at 3c per pound (see Hardwick Hearings), and the beet men 


themselves boast of this when seeking financial assistance. 

Taking their own figures, the cost of producing and selling in good, bad and indifferent fac¬ 
tories, the Hardwick Committee shows that the average cost was only . 3-54C per lb. 

Messrs. Willett & Gray show that the average New York refiner’s price for the past seven 

years on refined sugar has been. 4.98c per lb. 

The Department of Commerce and Labor, Bureau of Statistics, No. 240, page 517, shows 
that the average cost per pound, free on board in foreign countries, of the raw sugar imported, 

1905-1911, inclusive, was . 2.378c per lb. 

Add the freight, to get the average cost laid down at U. S. ports, say.14c per lb 

Making the in-bond price delivered at U. S. Ports... 2.518c per lb. 

Add the duty which we propose on 96“ test, 60c on full luty sugar, and 48c on Cuban importa¬ 
tions, making average rate actually paid, say.53c per lb. 

Making refiners’ first cost, duty paid. 3.048c per lb. 

Add the margin between price paid by refiners for raw sugar and their selling price on refined, the 

past seven years .859c per lb. 

Making refiners’ average selling price, under proposed ne\v rate . 3-907c per lb. 

New York. 


The beet sugar factories are located in the interior and sell their sugar above the New York price (see 
Bulletin No. 12), but, as this advantage is partly offset by the fact that the trade will not pay as much for beet 
sugar as for cane, we have not taken this advantage in price into consideration in this calculation. 

W’e find that the rate we propose would give beet sugar factories who produce at 3)^c per pound a profit, 
as a direct result of the tariff', of .407c per pound, or $8.14 per ton. 

And those properly located and equipped, and who produce sugar at 3c, a profit of .907c per pound, or 
$18 per ton. 

A cane refinery in New York is very glad to make an average profit of to 3-160 per pound. 

As the average price of granulated, under the present tariff, has been 4.98c per pound, the saving 
to the Aineriean people, under the proposed rate, zvould be over ic per pound, or over seventy-dve million dollars 
on the amount of sugar consumed in 1911. 

It is therefore apparent that the rate we propose will amply protect, for all legitimate purposes, the sugar 
industry of Porto Rico, Hawaii, Philippines, and also our domestic beets. It will only prevent the over-capitali¬ 
zation of beet-sugar plants, and the improper location of factories, where natural conditions are not such as to 
produce the best results. The industry would be on a much better footing if the tariff were revised so as to 
prevent both of these conditions, which are fundamentally so unsound. 

IN ALL OUR CALCULATIONS WE HAVE PROVIDED FOR THE BEET GROWER TO RE¬ 
CEIVE THE SAME PRICE THAT HE NOW RECEIVES FOR HIS SUGAR BEETS. So that, while 
there is ample room for disputing some of the statements regarding the farmers’ “indirect benefits ’ for the pur¬ 
pose of this argument, we can admit all that is claimed by the beet sugar factories. 

LOWRY REVENUE PLAN. 

Another feature to be considered in connection with the sugar tariff is the revenue feature. In 1911 the 
high tariff, which we have on imported sugar, produced for the Government about 52 million dollars, but this 











48 


“SUGAR AT A SECOND GLANCE” 


money was collected on only about 50% of the amount of sugar which we consumed, as only this much was 
imported from foreign countries and paid duty. The balance comes from Hawaii, Porto Rico, the Philippines 
and our domestic beet and cane productions. The selling price of this sugar is based on the in-bond value of 
foreign sugar plus the duty and its value is enhanced, at least, to the extent of the tariff, so that a like amount 
(52 million dollars) to that collected by the Government is handed to these producers as an indirect subsidy. 

Because the tariff rate on sugar is so high, the 52 million dollars collected by the (jovernment as a revenue 
from one-half of the sugar zvc use is 17% of the entire customs revenue of the United States. Is it right that a 
single necessity of life should be called upon to bear such a heavy part of the burden? 

There is a great differcjice bctzveen a protective tariff and a revenue measure. The protective rate which 
we propose would have produced for the Government in 1911 about $18,000,000 in revenue. It seems to us that 
in doing this sugar is producing its proper share, but if our Legislature should determine that sugar alone musf 
produce more revenue, then all the sugar which zve consume should share in producing this revenue, and we 
should adopt the revenue or “consumption tax” just as has been done all over Europe. 

Every time a tax of pjc per pound is placed on the total amount of sugar consumed in the United States, 

about $19,000,000 is produced. This is equal to the amount produced by placing a tax of ^c per pound on 

the imported sugar but it only increases the price of sugar to the consumer jk+c instead of L2C as when the 
latter method is followed. 

If, in addition to the $18,000,000 or more collected on imports, $19,000,000 more revenue is needed from 
sugar, then require the refiners of both cane and beet sugar in the United States to pay a tax of 25 cents per 
100 pounds on their production. This would be purely a revenue measure, like the countries of Europe have 
adopted as a proper way of raising revenue, but at a much lower rate, and would be levied purely from a 
revenue standpoint and could be dropped whenever the revenue was not required. 

Under such a provision there need be no tax on razv sugar made in our insular possessions, Porto Rico, 

Hawaii, and the Philippines, or in Louisiana, as the tax of 2'5c per loo pounds would be paid on these sugars 

by refiners before they were put on the market. It would, however, be necessary to have a provision in the law 
that any refined sugar they might make or any raw sugar imported from any source for direct consumption would 
have to pay the revenue or “consumption tax” of 25c a hundred pounds. 

Allowing for a proper increase of, say, 10% in consumption such a revision of the sugar tariff would 
have produced in 1911, a revenue for the Government of about $39,000,000, and has the added advantage that it 
zvill yield more revenue each year as the consumption increases. Under the present ruling this is reversed; and, 
notwithstanding the fact that our consumption has increased over 25% in the last seven years, the Government 
derives less revenue from sugar now than it did seven years ago. 

Such a readjustment as we propose would materially reduce the price of sugar to the consumer, give a 
greater protection to our domestic industry than is granted by Germany, Austria. France, Holland or Belgium, 
where beet sugar is produced so extensively, and afford the Government of the United States a very handsome 
revenue. 

This method of producing revenue is the one followed by the various countries of Europe, where beet 
sugar is produced so extensively. These countries have adopted what is called a “consumption tax,” which all 
sugar, whether of foreign or domestic origin, is required to pay. In Germany this tax amounts to 1.51c per 
pound, in France 2.36c per pound, Austria 2.39c per pound, Holland 4.82c per pound, and Belgium 1.75c per 
pound. Such heavy taxes as these would be entirely unnecessary in this country, but it would be perfectly 
feasible for us to collect all the revenue required from sugar in this way, and the rate could be reduced or 
increased as warranted by the situation. 

.A favorite plan of those who profit by our tariff is to add the duty and the consumption tax and hold this 
up as the “protection” given the beet sugar industry in Europe. They will say; “The tariff in Germany on raw 
sugar is 1.980." They add to the 47c rate of duty the consumption tax of $1.51 and get $i 98 but they do not 
say that all sugar produced in Germany must also pay the consumption tax of $1.51 so that the protection is 
only the tariff rate of .47c per pound. 

This is, of course, only one of the many ways of getting tariff favors by false information. 


•‘SUGAR AT A SECOND GLANCE” 


49 


TARIFF HANDICAPS TO EXPORT BUSINESS. 

Our domestic sugar industry contends that the tariff is not a handicap to a domestic manufacturer or pre¬ 
server doing an export business. This is not a fact; it is a serious handicap. (Senate Hearings, pages 457-458). 

The matter of collecting drawback is a serious proposition to the small manufacturer. He cannot afford 
to be without his money three, six or nine months as is required in getting settlements of drawbacks from the 
Government. These drawbacks are collected through the Customs House Brokers in New York, and a great deal 
of that business is done on the basis that the Customs House Brokers shall be paid a percentage of the amount 
collected. 

I he exporter is required to get certificates of origin from the refiner, and, of necessity, there is a great deal 
of red tape connected with these drawbacks. 

Another serious difficulty is that when a manufacturer purchases sugar he does not know its origin. He 
may manufacture his product from that sugar, quote a price ior export based on the assumption that he is going 
to receive drawback, secure the business and make the shipment, after which he makes application to the refiner 
for a certificate of origin only to find that the sugar has been manufactured from Porto Rican, Louisiana, Ha¬ 
waiian or Philip]:)ine raw sugars, on which no duty has been paid, and therefore, no draivback can be collected; 
so that the manufacturer attempting to do this export business is simply out that much money. 

To the knowledge of the writer this has often happened, and under such conditions it does not take long 
to discourage an export business. 

These handicaps were impressed on the Ways and Means Committee by Ex-Governor Bert M. Eernald, 
President of the National Canners’ Association, who, as a part of his argument for a material reduction in the 
tariff" on sugar, presented the following letter from the Canners’ League of California: 


The W'ays and Means Committee of Congress, San Francisco, Cal., January 9, 1913. 

Wkishington, D. C. 

Gentlemen: The Canners’ League of California, an organization representing practically all the fruit and 
vegetable canners of this State, giving employment to nearly 30,000 people during the packing season, asks for a 
material reduction in the tariff on raw and refined sugar. 

It is our opinion that the sugar industry, if conducted as a legitimate manufacturing enterprise, whether in 
Hawaii, Porto Rico, or on the mainland, requires no protection. 

It is our opinion that as a revenue producer the present tariff" lays a heavy and unreasonable burden upon 
the consumer, compelling him to pay an unnecessarily high price on domestic sugar, which yields no revenue 
to the Government. 

It is our opinion that in our endeavor to extend our foreign markets we are seriously handicapped by the 
present duties on sugar, being at a serious disadvantage as compared with British exporters. If it be contended 
that the drawback law is an offset, it can be successfully maintained that the law is inadequate for the reason that 
our manufacturing must be done during the fruit season, before the nature and extent of foreign markets can be 
fairly estimated. The rules of the Treasury Department require us to file at the beginning of the j)acking season 
a notice of intent to manufacture, showing the exact quantity of each grade of each variety of fruit to be packed 
with imported materials. However carefully these estimates be made, they never fit the actual market conditions, 
and canners having paid the higher price for duty-paid material usually find themselves “long” on some grades 
and varieties for which there happens to be no export demand, and such goods must accordingly be sold to the 
domestic trade without benefit of drawback and at a loss. They also find themselves “short” of goods available for 
drawback on other grades and varieties for which there is demand, and for which there are no goods remaining 
in stock packed with imported materials. 

In behalf of an industry of serious commercial importance to the laboring and the farming classes, as well 
as to the manufacturer, we respectfully urge this reduction, giving full assurance of our willingness to give up 
any measure of jirotection that the present tariff may afford to the canned-food industry if only we be given the 


50 


SUGAR AT A SECOND GLANCE” 


opportunity to secure our sugar and our tin plate at the lower prices which we believe will prevail in the event of 
the reduction of the tariff. 

Wq have the honor to be, very respectfully, yours. 

CANNERS’ LEAGUE OF CALIFORNIA, 

HENRY P. DURAND, Secretary. 

A reduction of the tariff" on sugar would not end with the direct benefits derived by consumers and those 
handling sugar, such as jobbers, retailers, transportation companies, refiners, etc., but it would also widen the 
market for American canners, preservers, and other industries, in which sugar is an important factor, who are, 
at the present time, unable to do much in the vay of an export business, because of the high prices they are forced 
to pay for their sugars. 

A material reduction in the sugar tax would at once enable our canners to greatly increase their exports, 
thus creating a demand for the fruits, berries, etc., of our farmers, which now go to waste for lack of a market. 
It would likewise increase the demand for all products used in these industries, such as tin plate, glassware, labels, 
cases, etc. The advantages to our farmers and people generally from the increased markets for these products 
are certainly worthy of consideration. 


•‘SUGAR AT A SECOND GLANCE” 


51 


Beet Sugar and the Tariff 

By Prof. F. W. Taussig 
Chair of Economics, Harvard University. 

SUMMARY 

Growth Since 1890—Concentration in the Far West—Climatic Advantages of the Arid Region— 
Intensive Cultivation Required—A Large Labor Supply Needed; an Agricultural Proletariat?—The 
Sugar Manufacturers Active in Procuring the Labor—Little Beet Sugar in the Central West—The 
Explanation Is in the Principle of Comparative Cost: Corn Is More Profitable—The Situation in 
Michigan—The Beet-Sugar Manufactories—Can the Argument for Protection to Young Industries Be 
Advanced? 

The beginnings of this growth of beet-sugar making fall in the period during which the tariff act of 1890 
was in effect. Barring a slight amount from one or two California enterprises, no beet sugar at all had 
been produced before that date. The act of 1890, it will be remembered, admitted sugar free of duty, 
but gave domestic sugar makers a bounty of two cents a pound. It would seem obvious that this put 
the domestic producers in no better position than before. The previous duty of two cents being abol¬ 
ished, their sugar fell in price by that sum; they simply got the bonus outright, instead of in the indirect 
form of an enhancement of price. Nevertheless the bounty of 1890 appears to have had a stimulating 
effect on the beet-sugar industry. There may be a psychological influence from the direct payment; just as 
there is a vast difference in the eff'ect on people’s state of mind between collecting taxes directly and collect¬ 
ing them through levy on producers of commodities, or merchants, who recoup themselves by higher prices. 
Probably no less effective than the bounty at the start, and more effective as time went on, was the propa¬ 
ganda of the Department of Agriculture. That Department has preached beet sugar in season and out of 
season; has spread broadcast pamphlets dilating on the advantages of beet-growing for the farmer and giving 
minute directions on methods of cultivation; has maintained a special agent, who kept in touch with the manu¬ 
facturers and farmers, and annually reported on the progress of the industry. The result was familiarity with 
the possibilities throughout the country, the removal of all obstacles from inertia and ignorance, and a rapid 
development in all regions where there was a promise of profits. 

What, now, are the regions in which the profit has been such as to lead to great development? The 
accompanying tabular statement shows what the situation has been since 1900—the period during which the 
growth has been most marked and its geographical distribution most easily followed. 

Beet Sugar Product in the United States 
(in million pounds of sugar) 

Other 



Total 

California 

Utah 

Colorado Michigan Wisconsin 

States 

1899-00 

163 

85 

19 

2 

33 


24 

1900-01 

172 

57 

17 

13 

55 

.. 

30 

1901-02 

365 

140 

28 

45 

105 

6 

41 

1902-03 

438 

159 

38 

78 

109 

8 

46 

1903-04 

466 

136 

46 

89 

128 

11 

56 

1904-05 

470 

93 

57 

111 

104 

22 

83 

1905-06 

635 

144 

48 

209 

122 

27 

85 

1906-07 

970 

178 

82 

343 

177 

36 

L 54 

1907-08 

852 

180 

93 

245 

171 

37 

126 

1908-09 

1.025 

255 

98 

299 

212 

34 

127 

1909-10 

1,120 

280 

77 

206 

278 

36 

243 

I9IO-II 

1,019 

291 

76 

206 

260 

38 

148 


52 


“SUGAR AT A SECOND GLANCE” 


One fact is obvious on a cursory inspection of these figures. The beet-sugar industry is in the main 
massed in the far West—in California, Utah, Colorado, and the adjacent region. The agricultural belt of the 
Central States has a very slender share. Only one state in this part of the country, Michigan, makes a 
considerable contribution to the supply. Wisconsin adds a very little. No other state in the central region has 
more than one beet-sugar factory. Barring Michigan, the production of beet sugar may be said to be confined 
to the Rocky Mountain and Pacific States. In 1909 the four states of California, Colorado, Utah, and Idaho 
contained 250,000 acres out of a total of 420,000 used for beet culture, and produced nearly 700 million pounds 
of sugar out of a total of 1,000 millions. 

The explanation of this geographical concentration does not lie in any obstacles from climate or soil m 
other parts of the country. The beet flourishes over a very wide area. An instructive pamphlet issued by the 
Department of Agriculture shows the zone in which the sugar beet may be expected to “attain its highest per¬ 
fection.” This zone or belt, two hundred miles wide, starts at the Hudson, and sweeps across the country to 
the Dakotas; turns southward through Colorado, New Mexico, and Arizona; and then, turning again, proceeds 
west and northwest through California, Utah, Idaho, and the Columbia valley. It includes a great part of the 
North Central region. Yet in this, the most important and productive agricultural region of the country, there 
is virtually no beet-growing or sugar-making, except, as just mentioned, in Michigan. The climatic and agri¬ 
cultural possibilities are not turned to account until the far YTst is reached. 

Two circumstances are dwelt on by those well informed concerning the conditions favorable to beet¬ 
growing in this western region: the climate and the special advantages of irrigation. 

The variety of the beet suitable for sugar-making flourishes in a cool climate; but it needs plenty of sun. 
“Abundance of sunshine is essential to the highest development of sugar in the beet. Other things being equal, 
it may be said that the richness of the beet will be proportional to the amount-—not intensity—of the sunshine. 
Evidently the cool region of cloudless sky in the arid West, including the high-lying parts of Arizona and New 
Mexico, meets this condition perfectly. 

Again: “in respect to moisture, the sugar beet is peculiar in some respects. . . . There are three 

periods in the life history of the sugar beet which demand entirely different treatment so far as moisture is con¬ 

cerned: (i) the germinating or plantlet period; (2) the growing period; (3) the sugar-storing period.” During 
the first “the beet needs sufficient moisture and warmth to germinate and start it, but never an excess.” Dur¬ 
ing the second, “the beet needs little if any moisture.” During the third, or sugar-storing period, “the plant 

should be given no water. The conditions desirable at this period are plenty of light and dry cool weather. If 
the beet is given moisture to any considerable extent, it will be at the expense of both sugar and purity.” 

It is clear that the irrigated regions of Colorado, Utah, Idaho, Montana, supply just the right combi¬ 
nation of climate and moisture: cool temperature, abundant sunshine, moisture as needed, absence of moisture 
when harmful. Hence Colorado and Utah are described as the ideal beet-sugar states. “Considering every¬ 
thing, Utah is the ideal beet-sugar State. ... Its natural conditions are quite similar to those of Colorado.” 
In Colorado 12 to 25 tons of beets to the acre are readily secured; even in the early days 15 to 173^ tons were 
got on the average; whereas in European countries not only is the tonnage per acre less, but the sugar content 
smaller. Some of the districts of California have the required combination of soil and moisture without irriga¬ 
tion, or with little irrigation. California has some further advantages. Its equable climate enables the beet- 
sugar “campaign” to be spread over a longer period than elsewhere; and its beets have a very high sugar content. 

Contrast these conditions with those of a state like Michigan, where the annual precipitation is consid¬ 
erable, and where the distribution of the precipitation depends on the accidents of the season. In 1909, for 
example, the agent of the Department of Agriculture reported that “On the whole the weather conditions in 
the state during the past year were rather unfavorable. The spring was cold, wet, and backward, but more 
favorable weather prevailed during the growing season, though there was considerable tendency to drought. 
The weather was especially favorable for harvesting beets. This is a critical period. Dry weather lessens the 
work and improves the beets.” In 1901, 1902, and 1903 there were bad seasons in Michigan: “there was con¬ 
siderably more rain than was desirable, necessitating expensive work in weeding and cultivation. The cold wet 
rains of the fall delayed the harvesting and belated the work of the sugar factories.” In 1904, on the other 
hand, the season happened to be favorable. Evidently the Michigan farmer is at a disadvantage because of the 
uncertainties of the weather. The farmer of the irrigated arid region can always count on abundant sunshine, 
and can apply moisture exactly as needed. 


“SUGAR AT A SECOND GLANCE” 


53 


For all these reasons “Michigan farmers cannot grow as high a tonnage as they do in the Western States 
under irrigation; their beets are not naturally of as high a quality and probably they never will be.” The 
same holds of other parts of the North Central region. “In Iowa, the beets have not been as high in quality 
as those grown in California, Colorado, or Idaho.” 

Turn now to another aspect of the problem—the kind of cultivation required for beet-raising. The situ¬ 
ation is the same as I described it in 1889. Intensive culture and much hand labor are necessary. Professor 
Shaw, in his valuable reports on the industry in California, has more than once used the phrase: “The grow¬ 
ing of beets is not agriculture, but horticulture.” All the manuals and pamphlets insist on the need of elaborate 
preparation, minute care, much labor directly in the fields. The planting of the seed does indeed take place 
by drills, the plants coming up in continuous rows. But after this first operation, painstaking manual labor is 
called for. When the young shoots come up, they need first to be blocked, then thinned. “Blocking” means 
that all the beets in the rows are cut out by a hoe, except small bunches about ten inches apart. These bunches 
are then “thinned”; every plant is pulled out by hand except one, the largest and healthiest. “Great care should 
be exercised in this work, and by careful selection all the inferior plants should be removed. . . . When 

thinning, it is a good plan to give the ground a thorough hand hoeing.” Throughout the growing period the 
beets must be cultivated, partly with a horse cultivator, partly with the hand hoe. “The cultivator and the hoe 
should be used alternately until the beets are too large for horse cultivation without injuring them. Hand 
laborers should continue to go over the beet field, pulling the weeds and grass that may have persisted.” 

Essentially the same situation appears when harvesting is reached. The beets may be first loosened 
by a plow and by a lifter; but each individual beet must be pulled out by hand. Then they are knocked 
together gently to remove the adhering dirt. Finally, they are “topped”; that is, the neck and leaves are cut 
off with a large knife. “The removal of the tops of the beets is a tedious process, which in Europe is per¬ 
formed by women and children. . . . Constant supervision is necessary in this work.” 

No machinery has been devised that serves to dispense with the large amount of hand labor called for. 
■"‘Several attempts have been made to construct a mechanical device by which the beets can be topped, thus 

saving a large expense, and perhaps a successful device of this kind may some day be invented.” So far as is 

known at the present time, however, this process has not been successfully accomplished by machinery, and the 
topping must still be done by hand. “Inventive ingenuity in Europe and especially in America,” said the Special 
Agent of the Department of Agriculture in 1906, “has been directed to planning a harvester which will do awav, 
as far as possible, with this expensive hand work. ... It cannot be said that any of these newly devised im¬ 
plements works successfully in all soils.” In 1909 he reported that “these machines are not now in general 
use, but their use is increasing”; and he still laid stress on the need of elaborate hand cultivation. 

It follows that the successful growing of the sugar beet calls for a large amount of monotonous unskilled 

labor; no small part of it, labor that can be done by women and children, and that tempts to their utilization. In 
the documents of the Department of Agriculture there is constant reference to the peculiar labor problem con¬ 
fronting the farmer who sets out to raise sugar beets. ‘"As a rule the farmer, if he grows beets to any extent, 
does not have on his farm sufficient labor to take care of the work of thinning, bunching, hoeing, and harvesting 
the sugar beets.” Not only does the typical American farm and farm community lack the number of laborers 
required; the labor itself is of a kind distasteful to our farmers. “Thinning and weeding by hand while on 
one’s knees is not a work or posture agreeable to the average American farmer. Bending over the rows and 
■crawling along them on one’s hands and knees all day long are things that the contracting farmer is sure to object 
to as drudgery. . . . Our farmers ride on their stirring plows, cultivators, and many implements.” As was 

remarked by one of the witnesses before the Ways and Means Committee, at a tariff hearing: “the thinning 
and the topping of the beets it is pretty hard to get our American fellows to do, and they prefer to hire the 
labor and pay for it.” The Kansas State Board of Agriculture informs its constituents: ""if the American 
farmer is to realize all possibilities in raising sugar-beets he will do so through his ability as a superintendent 
and not as a drudge.” 

The manner in which this need of extra labor has been met is instructive not only as regards the beet- 
sugar situation itself, but also as regards the general trend of industry in the United States during the last 
generation. 

Almost everywhere in the beet-sugar districts we find laborers who are employed or contracted for in 
gangs; an inferior class utilized and perhaps exploited by a superior class. The agricultural laborers in the 


54 


“SUGAR AT A SECOND GLANCE” 


beet fields are usually a very different set from the farmers. On the Pacific coast they are Chinese or Mexi¬ 
cans. Except in Southern California, where the Mexicans are near at hand, most of the work is done by 
Japanese under contract; there being usually a head contractor, a sort of sweater, who undertakes to furnish 
the men. In very recent years Hindoos (brought down from British Columbia) also have appeared in the beet 
fields of California. In Colorado “immigrants from Old Mexico compete with New Mexicans (n e., born in 
New Mexico), Russians, and Japanese.” Indians from the reservation have been employed in Colorado; and 
boys have been sent out under supervisors from the Juvenile Court of Denver. At one time, convict labor was 
used in Nebraska. 

In some parts of Colorado, in Montana, and at the beet fields of the single factory in Kansas, Russian 
Germans are employed. These curious and interesting people are Germans who were imported into Russia by 
the Empress Katherine; they persistently maintained their race and language and religion; in recent years 
they have been driven from Russia by persecution. They now center about Lincoln, Nebraska, and are shipped 
under contract to the beet fields, where they are assiduous and much-prized workers. They are much more 
welcome than the fickle Indians and Mexicans; more welcome even than the Japanese, who are cjuick and cap¬ 
able, but often break their contracts. The German Russians camp in whole families at the beet region for the 
summer; men, women, and children toil in the fields. In Michigan, the main labor supply comes from the 
Polish and Bohemian population of Cleveland, Buffalo, Pittsburgh. The circulars issued by the Department of 
Agriculture and by the state boards and bureaus repeatedly call the attention of the beet farmers to the possi¬ 
bility of employing cheap immigrants. The troublesome labor problems, it is said, need not cause worry: here 
is a large supply of just the persons wanted. “Living in cities there is a class of foreigners—Germans, French, 
Russians, Hollanders, Austrians, Bohemians—who have had more or less experience in beet-growing in their 
native countries. . . . Every spring sees large colonies of this class of workmen moving out from our cities 

into the beet fields.” 

The sugar manufacturers, who buy the beets and make the sugar in their factories, play a large part in 
bringing this labor to the fields. Indeed, they play a large part in every phase of the industry—on its agri¬ 
cultural side as well as on its manufacturing side. They supply seed; give the farmers elaborate directions on 
methods of cultivation; employ supervisors to visit and inspect the farms, and to spur the farmers to the needed 
minute care; of necessity they test the beets at the factory, and pay according to sugar content; and they often 
undertake to provide the labor. Sometimes the factories contract to attend to the field labor themselves, receiv¬ 
ing from the farmers a specified price—so much for bunching and thinning, so much for each hoeing, so much 
for topping. The farmers then have nothing to do but supply “reasonable” living accommodations. More often 
farmers, not thus provided for, secure their laborers through contractors, at a fixed price of so much (vary¬ 
ing from $15 to $20) per acre for all the work; these middlemen being hunted up or selected for the farmers 
by the factory managers. Such “sweaters” make a profit from their sub-contract with the field hands; the 
system being open to the possibilities of over-reaching which arc too familiar under such arrangements. 

All this is part of the transformation which has been wrought in so many parts of our social and 

economic structure during the last quarter of a century by the vast inflow of immigrants. Manufactures have 
been most obviously affected by it. Our textile trades, the iron and steel industry, the glass manufacture, have 
in greater or less degree adjusted their methods and machinery to the new labor supply. The tariff situation 
has been modified; not a few industries can maintain themselves without tariff aid, or with little aid, which 
formerly could allege more plausibly the need of high duties. Agriculture also is feeling the influence of the 
new conditions. Laborers from the congested foreign districts of the cities—Italians, Bohemians, “Huns,”^ 
“Polaks,” Russians—make their way to the market gardens surrounding the cities, to vegetable districts such 

as that of the Chesapeake peninsula, to the cranberry fields of New Jersey, and do the hard work for the 

shrewd Yankee farmers. Possibly these field hands are on the way to the acquisition of land through their 
savings. Such persons as the Russian Germans who work in the beet fields are not likely to remain long in 
their present semi-servile state. These are doubtless progressing toward land ownership. Possibly the same 
upward movement will be achieved by many members of the other races. But certainly for the time being the 
conditions are socially and industrially unwelcome. They are not dissimilar to those of the Sachsctigangcrei, 
of ill repute in eastern Germany. They are very different from the conditions which we think of as typical of 
agriculture in the United States. There is an agricultural proletariat in the beet fields. 

As yet. however, the main agricultural region of the United States—the great Central region in which 
are the wheat and corn belts—has been little affected. Here we still find extensive cultivation, agricultural 


“SUGAR AT A SECOND GLANCE” 


55 


machinery, the one-family farm. It is true that during the harvest season there is a heavy demand for agri¬ 
cultural laborers, and that this is satisfied by laborers who may be said to constitute an agricultural proletariat. 
It is true also that the stage of pioneer farming has been passed or is rapidly being passed, that rotation is 
becoming more systematic and skilful, the land more valuable, cultivation more intensive. Nevertheless this 
remains the region of the one-family farm. The farmers “ride on their stirring-plows and cultivators” and in 
this way are able to do most of the work on their lands for themselves. 

Throughout the corn belt there is no sugar-beet industry of any moment; yet the corn belt is largely 
the same as the potential beet-sugar zone. The explanation seems to me clear: it pays better to raise corn. 
In the language of the economists, there is a comparative advantage in corn-growing. This grain is peculiarly 
adapted to extensive agriculture. It also lends itself readily to the use of machinery; corn can be “cultivated” 
between the rows by horse power. It is a substitute for root crops, and can be rotated steadily with small-grain 
crops. It is a direct competitor with the sugar beet for cattle fattening. The advocates of beet-raising always 
lay stress on the value of the beet-pulp, the residue at the factory after the juice has been extracted, for cattle 
feeding. But corn is at least equally valuable for the purpose and the typical American farmer raises it by 
agricultural methods which he finds both profitable and congenial. One man can grow forty acres of corn. 
He can plant only twenty acres of beets; and these he cannot possibly thin and top. In Iowa “the farmers 

are progressive, successful, and satisfied. In fact, this has been the main obstacle to installing the sugar indus¬ 

try there. The farmers have not shown a disposition to grow the beets. When the farmers are advised that 
beet culture is accompanied with considerable hard work, factory propositions usually succumb to the inevitable. 
The farming class of the state is accustomed to the use of labor-saving implements in the fields.” And yet 
Iowa “has the quality of soil and the climatic conditions necessary for producing a large tonnage of beets.” 

It is true that Michigan, and Wisconsin also, are outside the corn belt. Except along the southern edge 

of these states, the grain does not ordinarily mature. But corn still remains a formidable competitor of the 

sugar beet, in its use through ensilage. It is cut green, stored in the silos, and so is available for cattle feeding. 
It continues to be available in rotation with other grain and with grass. During the last two decades Wisconsin 
has become a great dairy state. “The pasture, hay, and corn lands of the state form the basis of the live-stock 
industry.” Here there is a profitable system of agriculture in which there is no need of the minute attention, 
the elaborate cultivation, the concentrated labor, which are required for the sugar beet. 

To sum up: beet-growing calls for highly intensive cultivation. As I stated in 1889, it is not adapted 
to the typical agricultural conditions of the United States. On the irrigated lands, w'here its development has 
been so surprising, the conditions are not typical. There is likely to be intensive cultivation in any case. 
The land is comparatively expensive—counting the cost of irrigation as part of the cost of the land. Hence 
the land must be called on for a larger gross product, through garden crops and the like. Add the special 
climatic advantages of the arid region, and it is easy to see why beet culture is found advantageous. But 
through the greater part of the theoretical beet-sugar belt, and especially in the corn belt, more extensive 
methods of using the soil pay better. Beet-growing finds no place in the region of the one-family farm. 

No doubt it is true that agriculture in the North Central District and to some degree throughout the 
United States, is in a stage of transition. Corn and the small grains, though they remain the fundamental 
crops, are being supplemented by root crops, and there is more and more resort to dairying. How far this 
transition will be carried must depend on the pressure Df demand for agricultural produce in consequence of 
the growth of population, and on the social forces which influence land ownership and land tenure. The con¬ 
ditions of labor supply are also important; and these may influence the development of agriculture as pro¬ 
foundly as they have that of manufactures. But as yet it is only under exceptional circumstances that the 
American farmer will find it profitable to carry on such intensive cultivation as beet-growing requires. 

The relation of the beet-sugar industry to the tarifif presents, on its agricultural side, one of the many 
cases of differing costs. If the formula is to be applied which is now so much in vogue—protect in proportion 
to the higher cost of production in the United States—the legislator must face the dilemma that the protection 
which suffices for one set of producers more than suffices for others, and in that sense is excessive. The situ¬ 
ation, of course, is one familiar in the extractive industries, and in all industries in which there are permanent 
causes of variation in cost. It costs more to produce beets in Michigan and Wisconsin than it does in Cali¬ 
fornia and Colorado. The beet-sugar producers of the West can turn out sugar profitably at a price of some¬ 
where near three cents per pound. Those of Michigan find it hard to extract a profit at four cents a pound. 
The beet-sugar industry of the far West, under the present tariff-raised price of sugar, is steadily reaching east- 


56 


“SUGAR AT A SECOND GLANCE” 


ward with its product, and has become a formidable competitor both of the Michigan industry and of the 
imported and domestic cane sugar. 

The Michigan sugar makers hence are uneasy about the future; and they plead strenuously for consid¬ 
eration to their vested interests. It must be admitted that the plea is in one regard of exceptional force. Not 
only has the general policy of protection been long maintained by Congress, and investment in accord with it 
encouraged; but, as one of the witnesses before the Ways and Means Committee said in 1909, “the invest¬ 
ment which our company made in the sugar business was made on the invitation and urgent advice of the 
United States Government through its Department of Agriculture." It is a serious responsibility which the 
Department has thus taken on itself. Its zeal too often has been indiscriminate. Its propaganda has rested, in 
part at least, on a crudely mercantilist principle: on the assumption that it is desirable to produce within our 
own borders anything and everything that can possibly be produced there, and that a tariff policy based on 
this assumption will be maintained indefinitely. 

A question in some respects different is presented by the beet-sugar factory, which buys the beets from 
the farmers and makes the sugar. Here there is what the business world calls “a straight manufacturing propo¬ 
sition.” Whether the manufacturing of sugar can be done to advantage in the United States depends on the 
same conditions as in other manufactures. It is much affected by the opportunities for using machinery and 
for the exercise of American inventive and engineering capacity in improving machinery. Such evidence as I 
can get indicates that, so far as this branch of the industry is concerned, the conditions are not unfavorable 
to its successful prosecution, with little need, if any, of tariff support. When the first factories were built in 
California the machinery was imported from Germany. “The Yankee inventive genius of machinery men at 
once took hold of the matter, making so valuable improvements that both the above mentioned factories (at 
Watsonville and at Chino) were shortly refitted with machines of American make, and every factory in this 
country in the last few years has purchased American machines.” So in the Department of Agricultures’ 
pamphlet on the industry, it is stated that “in the early days of the beet-sugar industry in this country, Europe 
was called on to furnish all machinery. Now very little is imported, and in fact some of the foreign factories 
are using American-made machinery.” The domestic making of machinery, the breaking loose from European 
tutelage, the introduction of technical improvements—these are significant indications of the successful adapta¬ 
tion of a new industry to American conditions and of ability to meet foreign competition unaided. It should 
be borne in mind, moreover, that the factory managers take an active part in directing and supervising the 
agricultural operations. In this regard there seems to be abundant and successful enterprise. The managers 
of the beet-sugar factories have been chiefly instrumental in bringing the indispensable labor supply to the farms. 
Through traction engines and the like, they have grappled with the difificulties of transporting the beets from 
the field to the factory. They have selected the seeds, and have assiduously spread information among the 
farmers on the best ways of getting a large tonnage of beets and a large content of sugar. In the far West 
especially, all this activity has been carried on with industrial and pecuniary success. Neither in the factory 
itself nor in the problems of organization arising from the interdependence of farm and factory has there been 
a lack of skill or energy. 

It is, I think, another sign of successful adaptation to new conditions that the American beet-sugar 
factory carries its operation a stage farther than do the factories of Europe. The latter usually produce raw 
sugar only, which is sent to the refineries for the last stage of preparation; precisely as our cane sugar is im¬ 
ported in the “raw” form, and goes through the refineries before being marketed for consumption. The Amer¬ 
ican beet-sugar factories, on the other hand, make refined (granulated) sugar, which is sold at once to the 
grocers. In Europe the greater geographical concentration of beet-growing and sugar-making, and the conse¬ 
quent ease of transportation to refineries near by, probably account for the practice there prevailing. The dif¬ 
ferent American practice doubtless took its start because refining was controlled, during the earlier years of 
beet sugar, by the Sugar Trust and its affiliated concerns; but it has persisted because it fits the geographical 
and industrial conditions of the industry. Another reason is that in Continental Europe beet farming and sugar 
making constitute commonly one integrated enterprise, and are associated either with estate farming on a large 
scale or with direct co-operation between large-scale agriculturists and the factory o\vners. A different sort 
of co-operation between farm and factory was necessary under our conditions of land ownership, and this has 
been worked out successfully by the American manufacturers. Neither in the technical aspects of the manufac¬ 
turing industry, nor in its appropriate organization, is there indication of any disadvantages in the United 
States. 


“SUGAR AT A SECOND GLANCE” 


57 


On the agricultural side—to turn again to this, the real seat of difficulty—it is constantly said that 
sugar beet-growing has many and varied advantages. The high cultivation, it is said, improves the quality of 
the land; the general fertility of the land is enhanced; a better rotation is established; the by-products, espe¬ 
cially the beet-cake, are valuable for cattle feeding, and this in turn provides manure and maintains fertility; 
the factory makes a market for local coal and lime; it “stimulates banking and almost all kinds of mercantile 
business.” These advantages have been dwelt on almost ad nauseam in the publications of the Department of 
Agriculture. So far as the tariff question is concerned, they prove too much. If beet culture is so very advan¬ 
tageous for the farmer, why does he need a bonus or protective tariff to be induced to engage in it? The 
American farmer is not an ignorant or stolid person; he has access to a multitude of educational and propa¬ 
gandist agencies, and is even beset by them; he is a shrewd observer, a ready innovator. The agricultural 
methods of the central region have been revolutionized during the past generation, with the transition from 
pioneer farming to conserving agriculture. If beet culture were really so advantageous a part of the general 
change, we might expect its speedy and widespread adoption. I suspect the advocates of beet-growing have 
been making the same mistake as those English travellers who in the early part of the nineteenth century 
damned American agriculture as hopelessly inefficient. They suppose that the highest cultivation is necessarily 
the best cultivation. The agricultural expert is apt to be intent on the gross product, to search for the largest 
yield per acre. But the best agriculture is that which secures the largest yield not per unit of area but per 

unit of labor. Minute cultivation means a large product per acre but by no means necessarily a large product 

per man. 

None the less, it may be argued, with show of reason, that the introduction of methods of cultivation so 
radically novel as those of beet-growing may be prevented from taking place even though in reality profitable. 
The young industries argument may be advanced. Ignorance, settled habits and prejudices, unaccustomed 
methods, the inevitable failures in first trials, all these obstacles, it is said, stood in the way of the beet-sugar 

industry in its first stages. Some sort of premium was necessary to give it a fair start. It is true that the 

argument for protection to young industries has not been supposed to apply to agriculture by List and his fol¬ 
lowers ; since unalterable conditions of soil and climate are thought to determine once for all the geographical 
distribution of the extractive industries. But it would be hazardous to lay down an unqualified proposition of 
this sort. It is not impossible that the course of industiy may be guided and diverted to advantage, in agri¬ 
culture as well as in manufactures. The difference between the two cases wovdd seem to be simply one of proba¬ 
bility, of degree. It can doubtless be said that industry is more likely to pursue its “natural” course in the one 
case than in the other; since agriculture rests mainly on physical adaptation, while in manufactures much de¬ 
pends on acquired skill. In the contemporary German controversy, the young industries argument has been 
advanced in support of the existing grain duties of that country. It may be argued that, in the far West at 
least, beet-sugar making has proved its economic advantage. It certainly has passed the experimental stage; and 
it seems to have reached the stage where protection is no longer needed. 

In general, the argument for nurturing protection remains of doubtful validity for agricultural products. 
In Germany, as in this country, education, experiment stations, diffusion of information adapted to the indus¬ 
trial' conditions, are more promising means of promoting agriculture than tariff protection. There is quite as 
much weight in the counter argument that low prices and the need of facing a difficult situation are effective 
spurs to agricultural improvement—more effective than high prices and easy gains. The low prices of raw 
sugar which prevailed for a long period proved a blessing in disguise to our Louisiana sugar growers; their 
methods of cultivation and manufacture were immensely advanced in the effort to meet new conditions. It is 
difficult to give a conclusive or unqualified answer on the questions raised by the young industries argument; the 
whole problem of the causes of industrial progress is involved. Yet it remains true that acquired skill and 
established advantage count much more in manufactures than in agriculture, and that tariff protection is a very 
<lubious device for spurring improvement in the use of the soil. 

All this, however, has little bearing on the beet-sugar situation as it now stands. If protection to young 
industries was needed, it has been given. The initial stages of trial and unfamiliarity are certainly passed. 
I'he industry in the far West has quite passed the infant stage. Its difficulties in the farming region proper 
seem to be due to the competition of the other kinds of agriculture, which under the typical American condi¬ 
tions are more profitable. If this kind of agriculture needs protection, and if the familiar grain-growing, cattle- 
fattening and dairying, of the corn-wheat belt do not, the explanation is still to be found in the principle of 
comparative cost. — Quarterly Journal of Economics, Harvard University, February, 1912. 


58 


“SUGAR AT A SECOND GLANCE’ 


Testimony of Frank C. Lowry Before the Ways and 
Means Committee, January, 1913 

The Chairman : All right. Mr. Lowry, you will proceed. 

Mr. Lowry: Mr. Chairman and gentlemen of the Committee, I represent the Federal Sugar Refining 
Co., of New York, and the committee of wholesale grocers, formed about four years ago to assist in obtain¬ 
ing cheaper sugar for consumers through the reduction of duties on raw and refined sugars. 

I fully appreciate that, so far as the tarifif on sugar is concerned, little can be added to the informa¬ 
tion which is already a matter of public record, and at the disposal of the committee. Consequently, any¬ 
thing that is said at these hearings must necessarily be in the way of repetition. 

I would first like to call the committee’s attention to the fact that the United States is not dependent 
for its supply of sugar upon ‘‘foreign countries,” in the general acceptance of this term. The consumption 
of sugar in the United States for 1912,, according to Messrs. Willett & Gray, w^as 3,504,182 long tons. The 
estimates for the following crops of 1912-13 are: 

Long tons. 


Cuba . 2,328,000 

Louisiana (1912) . 160,000 

Texas . 10,000 

Porto Rico . 340,000 

Hawaiian Islands . 500,000 

Philippine Islands . 200,000 

Domestic beet . 625,000 


Total . 4,163,000 


By this it wfill be seen that the production of sugar inside our tarifif wall more than equals consump¬ 
tion. All of these producers have the advantage of the full height of our tarifif wall with the exceptioti of 
Cuba, which is inside this wall to the extent of the 20 per cent, reduction, as a result of the recipiocity 
treaty of 1903. This island, adjacent to our shores, with interests so closely allied to those of the United 
States, has been favorably equipped by nature for the economical production of sugar and is able and will¬ 
ing to supply the United States with this sugar at a low cost if it were not for the high tarifif which en¬ 
hances the price. The testimony before this and the Hardwick committee has clearly shown that the do¬ 
mestic producer’s price is always based on the in-bond value of foreign sugars plus the duty and cost of 
refining. In addition to these charges, the beet-sugar factories add the freight from New York or San 
Francisco to distributing market as well. In the sale of the domestic producer’s product, the cost of pro¬ 
duction has no relation to the selling price. We have a clear exam])le of this in the price of sugar in our 
A\'estern States. Take January 6 as an example, and we find the following quotations made by the cane 
refiners and beet factories. 

New York City: Cents. 

Cane . 4.65-—4.70 

Colorado beet . 4.60 • 

San Francisco 

Cane .. . . . 5.20 

Beet . 5.00 

Denver, Colo: 

Cane . 5.50 

Beet . 5.20 

Chicago: 

Cane (N. Y. and San Fran, refined). 4.88; 

Beet . 4.735 

At this point I would call your attention to the manner in which the New' York price for refined 
sugar is arrived at: Cents. 

Raw^ sugars now' being received from Cuba cost refiners, basis 96° test, 
cost and freight, not less than 


2-375 




















“SUGAR AT A SECOND GLANCE” 


59 


Insurance, one-half per cent., or.012 

Duty . 1.348 


Refiners' first cost, duty paid. 3.74 

Deducting the usual discount of 2% from their price of 4.65c on refined, 
this leaves a margin to cover the cost of refining, packing, and mar¬ 
keting of the difference between 4. 6c and 3.74c, or.82 

The average margin for 7 years is.859 

After these deductions have been made anything that is left is profit. 


This calculation indicates that the price to the American consumer is being affected only to the 
extent of the tariff charged on Cuban sugars, and while this is true at the present time, when there is great 
pressure to sell in Cuba, it is not always the case, and during October, November, and part of December, 
1912, sugar paying the Cuban rate of duty, free sugar and sugar paying the full rate of duty, was being sold 
at the same duty paid equivalent. During this period the price to the consumer was affected to the full height 
of our tariff' wall. I cover this point more fully in my Drief under the heading “The Eff’ect of Our Tariff' 
A\'all and Cuban Reciprocity.” 

That, I think, shows you that the domestic producer bases his price on the New York price plus 
freight to interior markets, and the New York price is based on the foreign price, plus the duty. 

The trade will not pay the same price for beet sugar as for cane sugar, which accounts for the 
differential. 

Notwithstanding the fact that all the sugar used in our Western States is of domestic production, 
either being Hawaiian cane or domestic beet, and pays no duty, the price is always higher than in the 
East, where the sugar imported pays a high duty. As a result of the tariff the consumers in these Western 
States are receiving no benefit whatever from the fact that in their immediate locality refined sugar is being 
produced at a cost of around 3 cents a pound, the price only recedes as we approach the eastern coast, where 
the domestic producers come into competition with the refiners using imported sugar. The lowest price 
for sugar in the United States is in New York. 

Let us now see how the price for sugar to the American consumer is affected by the duty. Taking 
the figures of the Department of Commerce and Labor, Bureau of Statistics, No. 240, page 517, we find the 
average cost per pound, free on board in foreign countries, of the raw sugar imported from 1905 to 1911, 
inclusive, was 2.378c per pound. To this we must add the freight to get the cost laid down at United 
States ports, say, 0.14c, making the in-bond price of sugar at United States ports 2.518c. During these 
seven years the margin between the price paid by refiners for their raw material and their selling price on 
refined has been 0.859c per pound. Had refiners not been required to pay any duty on this sugar, and 
this margin were added to the in-bond price of the raAV material, it would have made the average selling 
price for these seven years 3.377c per pound. Messrs. Willett & Gray show that the average refiner’s price, 
free on board New York, for these years was 4.98c per pound, showing clearly that, as a result of the tariff', 
the price was increased to the extent of 1.603c per pound. We can therefore take this figure as a fair indi¬ 
cation of the indirect bounty that has been paid to the domestic sugar industry during these years. Tc 
give you an idea of what this amounted to, I would call your attention to the fact that, based on the con¬ 
sumption, during this period the American people have been required to pay $776,867,000 more for their 
sugar than they would have paid under free sugar. For this period the total value of the domestic beet: 
and Louisiana cane sugar produced was less than $500,000,000. 

During these seven years the Government collected in revenue from sugar the following amounts 


Consump¬ 

tion. 

Revenue. Long tons. 

1905 . $51,171,283 2,632,216 

1906 . 52,440,228 2,864,013 

1907 . 60,135,181 2,993,979 

1908 . 49,984,995 3^85.789 

1909 . 56,213,472 3,257.660 

1910 . 52,810,995 3.350.355 

1911 . 52,496,559 3.351,388 















6 o 


“SUGAR AT A SECOND GLANCE” 


It has been said that the tariff on sugar is a revenue measure, but, strictly speaking, this is not a fact. 
The Government now receives revenue from only about 50 per cent, of the sugar that we consume. If we 
are to tax sugar for the purpose of producing revenue then we should adopt the method employed by all 
of the principal countries of Europe and require all the sugar consumed to share in producing this revenue. 
This has been done by the application of what is known as a “consumption tax,” which is paid on all 
sugars, whether of foreign or domestic origin. Under this method our refiners of both beet and cane sugar 
would be required to pay a tax of so much per hundred pounds on the amount of sugar they produced, but 
there need be no taxes on raw sugars made in our in'sular possessions, Porto Rico, Hawaii, and the Phil¬ 
ippines, or in Louisiana, as the tax on these sugars would be paid by refiners before they were put on the 
market. It would be necessary, however, to have a provision in the law that any refined sugar they might 
make or any raw sugar imported from any source for direct consumption would have to pay the “con¬ 
sumption tax” before the sugar could be sold to the trade. In this way, by taxing all sugar consumed, say 
25c a hundred, the same amount of revenue can be raised for the Government as would be derived under 
an import rate of 50c a hundred on half the sugar consumed. It has the added advantage of only advanc¬ 
ing the price to the consumer 25c a hundred instead of 50c, and increases as consumption increases. You 
will note that under the present arrangement the Government derived little more revenue from sugar in 
1911 than in 1906, although consumption increased 17 per cent. I believe this demonstrates that from a 
purely revenue standpoint the present method of collecting revenue from sugar is faulty. 

The beneficiaries of our high tariff on sugar are loud in their clamor that the present rate should be 
maintained for the purpose of revenue; in the next breath they make the claim that it will not be long 
before all the sugar which we consume will be of domestic origin, and overlook the fact that in this event 
the Government will receive no revenue at all from the tariff on imported sugar; so it is clear that they are 
not so much concerned about Uncle Sam's pocketbook as they are about their own. 

Let us consider the domestic sugar producer’s position. It is not my understanding that the people 
of the United States desire to be heavily taxed so that the sugar producers in Porto Rico, Hawaii, or the 
Philippines can make excessive profits. 

If protection to infant industries were needed, it has been given. Porto Rico and Hawaii have prac¬ 
tically reached their maximum production, all available cane lands now being under cultivation, so that 
little further progress can be made, with the possible exception of improvements in yields and efficiency 
in the mills. Both of these islands have, in the past, worked successfully under conditions of absolutely 
free trade. Hawaii boasts, and with reason, that the industry is run under more scientific conditions than 
any other sugar industry in the world. It was currently reported that the Hawaiian crop of 1911 was sold 
for about $52,000,000, with the planters’ profits $20,000,000. I have not been able to ascertain what the 
profits were in 1912, but under date of November 21, 1912, the Kekahala mill declared a dividend of 
per cent. 

I do not believe that the American people should be heavily taxed so as to produce these results. 

Let us now consider Louisiana’s position. This “infant industry” is over 100 years old and has 
always been directly or indirectly subsidized. In 1894-95 it produced 316,000 long tons; in 1911, 315,000 
long tons, and the average for the last seven years is 316.500 tons. 

Louisiana has in the past contended that it cost them on the average 3^c per pound to produce raw 
sugar. In this statement they present the strongest possible indictment that can be drawn against their 
industry, as they clearly show that with Cuba, Porto Rico, and Hawaii producing the same grade of raw 
sugar at around 2c a pound the Louisiana industry is a highly artificial one. 

I do not, however, think this cost should be taken seriously, as it appears the cost in good, bad, and 
indifferent factories was taken and averaged, without taking any standard as a basis for arriving at a 
proper cost, and their view seems to be the same as that taken by the beet-sugar factories, namely, that the 
higher they can make their cost appear, the higher you must make the tariff bounty. I believe that closer 
investigation will show that the most slipshod methods are employed in many of the Louisiana mills, and 
consequently any returns made from them should be ignored. 

However, it is clear that this heavy indirect subsidy granted to the Louisiana industry by the United 
States Government has not tended to produce the best results. Messrs. Willett & Gray are the authority 
for the statement that there are now 2x0 mills in the State of Louisiana, of which 32 are the old open- 
kettle style of factory. So we find Louisiana, with 210 factories, producing 316,000 long tons of sugar, as 


“SUGAR AT A SECOND GLANCE” 


6 r 


compared with Cuba, with 174 mills, producing 2,328,000 long tons, and Porto Rico, with about 43 mills,, 
producing 340,000 long tons. 

These figures make it clear that, aside from all other reasons, the cost of producing sugar in Louis¬ 
iana, must necessarily be very high. But the happy-go-lucky methods of the Louisiana planter have not 
been the only, or even the most serious, handicap with which the industry has had to contend. Nature 
herself rebels against any attempt to grow cane sugar, a tropical plant, in a temperate climate. The con¬ 
stant fear of frost requires the cutting of the cane in October before it is properly matured and the result is 
that the cane yields only from 6 to 7 per cent., as compared with 10 to 11 per cent, in Cuba, with an occa¬ 
sional yield of 14 per cent., and 14 to 15 per cent, in Hawaii. 

After 100 years’ work, Louisiana, under unnatural conditions, but with a heavy subsidy as an oft'set, 
managed to produce 316,000 long tons, while Cuba, under natural conditions and without subsidy, increases 
its crop in one year over 425,000 long tons. If a clear example were needed of the fallacy of attempting 
to foster an industry under unnatural conditions, we have it in Louisiana. One constantly hears that the 
sugar industry is a detriment to the State, and if the people would only give it up and devote themselves 
to the cultivation of other crops for which nature has especially favorably endowed them, all would be on 
a much better footing. 

1 he industry has had its chance. Those engaged in it have had practically everything they wanted 
in the way of Government help, and they have no further claim on the American people if to-day they find 
themselves unable to meet their competitors, who are producing raw sugar under natural conditions at a 
cost of around 2c per pound and refined beet sugar at a cost of around 3c per pound. 

I do not understand it to be the wish of the American people that an illegitimate industry be subsi¬ 
dized through the tariff. 

The tariff, in its relation to the beet-sugar industry, is not nearly so complicated as the beneficiaries 
of the present tariff try to make it appear. 

The industry is divided into two parts, agricultural and manufacturing. The beet-sugar factories 
themselves recognize that the farmer who grows sugar beets does not require a high protective tariff, and 
they pay no more—and, if anything, less—for sugar beets than is paid by the factories in Germany, where 
the protective tariff rate is only 52c per hundred on refined and 47c on raw, as compared with our rate of 
$1.90 on refined, $1,685 full-duty-paying raw sugars and $1,348 on Cubas. 

They have presented ample evidence tending to show that the farmer is well satisfied with his pres¬ 
ent position; so that all the testimony that the representatives of the beet-sugar factories give to show how 
the farming industry will suffer if the tariff is reduced is put forth with a view of diverting your attention. 
You will hear a great deal about the farmers’ indirect benefits, and you will note in their arguments the 
beet-sugar factories conveniently ap])ropriate for themselves all the benefits to the farmer which come from 
“intensive” instead of “extensive" cultivation of the soil. They will compare the cereal and grain yields 
of the United States with crops of Continental Europe and claim that the high figures of the latter are 
due entirely to the cultivation of the sugar beet. They will avoid telling you that in England, where 
sugar beets are not grown, the yields of these other crops compares favorably with Continental yields, as 
this would prove conclusively that it was the manner of farming, and not the sugar beets that was respon¬ 
sible for these results. Taking the other side of the question, we find that sugar-beet yields in the United 
States are nearly the same (some localities exceed) a- in Germany, so that in this particular we are closer 
to the foreign yield than we are on cereals and grains. This would, of course, mean that less protection 
was needed by the farmer on sugar beets than on these other crops. All this, however, is aside from the 
issue: i. e.. as the farmer now receives no benefit from our high tariff on sugar, he therefore should not 
be handicapped by its removal. I would also mention that even the stand-pat element of the Republican 
party recognized that from an agricultural point of view no protection is necessary, as sugar-beet seed is 
admitted free of duty, and sugar beets (which are the product of the farm) pay only a nominal rate of 10 
per cent.. This, on the beets imported, is equivalent to 0.14c per pound of sugar, based on the sugar con¬ 
tent. 

Having found that the agricultural phase of this business does not benefit from the present high 
tariff, let us now consider the beet-sugar factory’s position. 

I have never heard the contention made that a well-equipped beet-sugar factory in the United States 
could not operate as cheaply as anywhere else in the world. The cost of labor does not enter to any extent 
into the factory’s cost of operation. One frequently hears the claim that beet sugar must be very pure. 


62 


“SUGAR AT A SECOND GLANCE” 


because it is not touched by a single human hand from the time the beets enter at one side of the factory 
until refined sugar is ready for delivery at the other side. So it is clear that the cost of labor does not play 
an important part in their process of manufacture. You will find in all their statements that the beet- 
sugar men confine their comparisons to statements along the following line; “We must have a high tariff 
because we pay our watchman $2 a day and in Germany he receives only 50 cents.” This is immaterial; 
it is the labor cost per pound of sugar produced that counts. This does not exceed 0.14c per pound. 

Fuel is an important item, and this, of course, is cheaper in the United States than abroad, particu¬ 
larly in our Western States, where oil is used. It is a well-recognized fact in the manufacturing business 
that the larger the production in a factory the lower the cost per unit, and the factories in the United 
States average considerably larger than those abroad. 

The investigations of the Hardwick committee proved what everyone in the sugar business knew— 
that the tariff on sugar has in the past served the purpose of enabling those engaged in the domestic beet- 
sugar industry to overcapitalize their plants and to pay excessive dividends on watered stock. As an indi¬ 
cation of how these interests have capitalized the tariff, I would call your attention to the fact that the 
combined capitalization of the beet-sugar plants in the United States is now $141,000,000, and these plants, 
working 3 months in the year, produce 625,000 long tons of sugar, while cane-sugar refiners, with approxi¬ 
mately $110,000,000 invested in refining, working 12 months in the year, produce 2,900,000 long tons. 

In closing I would like to call your attention to the fact that even the stand-pat element in the 
Republican party has admitted that the present tariff’ on sugar is indefensible. So all are agreed that 
some reduction must be made, and the question to be decided is how much, if any, of the present tariff 
should be retained? 

If you find it impossible to place sugar on the free list, I urge you to consider as a maximum rate 
the rate I recommended to the Finance Committee, 62c per 100 pounds on refined sugar and 60c on raw 
sugar testing 96°, with the assessed differential per degree of o.oo6c per pound. Importations from Cuba 
would, under our reciprocity treaty, pay 20 per cent, less than these rates, and as a result of this rate the 
price of refined sugar to the consumer would probably be advanced by the duty about 53c per 100 pounds 
instead of $1.60, as at present. 

Be assured that any sugar industry that can not work profitably with a protection of a half a cent a 
pound (this being 20 per cent, to 25 per cent, of the cost of production under natural conditions) is artificial 
in the extreme. 

Sugar is a large business and the margin of profit should be small in it and depending upon volume 
of business to carry you through. 

Mr. Harrison: This is the protective rate suggested by you? 

Mr. Lowry: Yes. 

Mr. Harrison: You do not refer to the present rate? 

Mr. Lowry; No. I am comparing the present “pork-barrel” protective tariff with a scientific pro¬ 
tective tariff. This rate I suggest is a trifle higher than the rate which the countries of Europe have arrived 
at as a proper protective rate. This is purely from a protective standpoint, you understand. 

I would call your attention to the fact that this protective rate is a trifle higher than that which the 
leading countries of Europe (where beet sugar is produced so extensively) have decided is a proper pro¬ 
tective tariff. The rate of 0.47c on raw and 0.52c on refined was agreed upon at the convention of a number 
of countries of Europe, known as the Brussels Convention, and was adopted by Austria, Belgium, France, 
and Germany as a maximum protective rate to be charged. This is, perhaps, the nearest approach we have 
to a scientific conclusion as to what is a proper protective tariff for the beet-sugar industry. No evidence 
has been presented to show that on a protective basis this rate could not be adopted by the United States 
to advantage. I would also call your attention to the fact that, based on the in-bond price of sugar for the 
past seven years of 2.518c per pound, this tariff would be equivalent to an ad valorem rate of about 21 per 
cent, and would produce $19,330,000 in annual revenue, would subsidize the domestic sugar industry to a 
like amount, $19,330,000, and would result in a yearlv saving on our present consumption of $83,988,234 
to the American consumers. 

It seems to me that in producing this much revenue a necessity of Iiie like sugar is doing its full 
share, but if you should decide that sugar must produce more revenue, then I urge you to adopt in addi¬ 
tion the consumption tax, which is strictly a revenue measure. 

Mr. Shackleford: As a revenue tax it would be paid by the consumer? 


“SUGAR AT A SECOND GLANCE” 


63 


Mr. Lowry: Oh, yes; just as the tariff tax is now paid by the consumer. You can not get revenue 
without having it paid by the consumer, I believe. The difference is if you tax all the sugars 25c a hundred 
pounds you get the same amount of revenue that you would by taxing half the sugar consumed, or that 
which is imported, at the rate of 50c a hundred pounds. The former method has the advantage of increas¬ 
ing the price to the consumer only a quarter of a cent a pound, while the latter increases the price a half a 
cent a pound. 

Mr. Shackleford: Is it an example that might become contagious? 

Mr. Lowry: In what way? 

Mr. Shackleford: As a means of taxing other domestic products. 

Mr. Lowry: If it reduced the price it might be an advantage to do that. I do not know whether it 
would become contagious or not. 

Mr. Payne: That chance for contagion has had about 100 years to work, has it not? 

Mr. Lowry: What did you say? 

Mr. Payne: That chance for contagion with other products has had about 100 years to work, has 
it not? 

Mr. Lowry: As I do not believe it to be the sentiment of our people that American industries 
should be compelled to compete with bounty-fed products of other nations, I would suggest that, whether 
or not sugar be placed on the free list, a countervailing-duty clause be enacted similar to that found in the 
tariff law of 1909, section 6, page 84. 

Gentlemen, the United States, because of its proximity to Cuba and its insular possessions, Porto 
Rico, Hawaii and the Philippines, as well as from the fact that beet sugar can be produced in our Western 
States at a very low cost, should have cheaper sugar than any nation in the world. From these sources, 
with their natural advantages, we are assured not only of an ample supply of sugar, but that this supply 
could be obtained at a minimum cost, if it were not for the high duty which enhances the price. 

No other nation in the world is so favorably situated, and the question is. Are the people to receive 
the benefit of our natural advantages, or are they to be exploited for the benefit of the promoters of our 
domestic beet and cane sugar industry? The present high tariff means the latter. 

In amplification of this I desire to file the attached statements, one under the caption of “Our high' 
tariff on sugar from the consumers’ standpoint” and the other a “Protest,” which directly refers to the 
majority report of the Senate Finance Committee. 

Mr. Lowry: There has been some question raised by the domestic sugar industry as to a reduction 
in the tariff going to the consumer of articles wherein sugar was used in manufacture. Condensed milk 
was one qf the points which they raised, and I made some inquiries on that question. It did not seem to 
me possible if you reduced the manufacturers’ first cost that competition would not take care of a reduc¬ 
tion in the sale price of his finished product. So, as I started out to say, I made some inquiries of con¬ 
densed milk manufacturers, and the conclusion is—-well, I will read this: 

Mr. F. C. Lowry, Philadelphia, November 27, 1912. 

Secretary and Treasurer, No. 138 Front St., New York City. 

Dear Sir: Replying to yours of November 26, we beg to advise that approximately 17 pounds of 
refined sugar enters into the manufacture of an average case of condensed milk. This, figured at i^c a 
pound, increases the cost of condensed milk per case by 27^ cents. There are 48 cans to a case, and the cost to 
the manufacturer is therefore increased by more than one-half cent per can. This one-half cent could be 
saved to consumers were the sugar duty abolished. 

Yours, very truly, 

HIRES CONDENSED MILK CO., 

H. C. HOOKS, Secretary. 

Mr. Lowry: This one-half cent per can could be saved to the consumer, in the case of the con¬ 
densed milk. 

I also made some inquiries of candy manufacturers, and found those who handled bulk candies were 
in favor of free sugar or a material reduction in the present rate of duty, while those who handled package 
goods were not so keen for it. I did not understand that at first, and finally when I put it up to them they 
said: 

Well, our industry is at present standardized. We have certain sizes of packages all through the 
industry, we will say, to sell for 5c or loc or some other sum. If you reduce the price of sugar we will 


64 


SUGAR AT A SECOND GLANCE” 


have to give a larger package for 5 cents or give a present 5c package for less money. That would mean 
a reorganization of our business and a lot of trouble. 

From this you will readily see that the consunVer would get the benefit from a reduction in duty. 

Now, gentlemen of the committee, I believe ^v*hat I have said pretty well covers the situation, taken 
together with the papers I have handed the reporter. If you would like me to review the matter further I 
can do so, or if you wish to ask any questions I will be glad to answer them. 

Mr. Fordney: Mr. Chairman, I would like to ask the gentleman a few questions. 

The Chairman: All right, Mr. Fordney, you may proceed. 

Mr. Fordney: Mr. Lowry, you have stated that the list prices for sugar in this country is based 
upon the rates for sugar in New York? 

Mr. Lowry: Yes, sir. 

Mr. Fordney: W^as this true during 1911? 

Mr. Lowry: In the main it was. There might have been a particular period when it was not, but 
—yes; I guess it was. 

Mr. Fordney: There was a very particular period. Is this not true, that an abundance of testi¬ 
mony was furnished before the special committee on the investigation of the American Sugar Refining 

Co., known as the Hardwick committee, that after domestic sugar was off the market in June the refiners 
in New York put up the price of sugar to as high as 7.5c per pound, and that continued during July, Au¬ 
gust and September? 

Mr. Lowry: There was ample testimony to show- 

Mr. Fordney (interposing): Is it not true whether there was testimony to that effect or not? 

Mr. Lowry: Domestic sugars, in the first place, came on the market in the latter part of August 
of that year. 

Mr. Fordney: No; wait a minute and answer the question I propounded. Let us see if we cannot 

get at this right. Is it not true that the price of sugar in New York advanced during July, August and 

September to as high as $7.50 per hundred pounds? 

Mr. Lowry: Yes; for a short period it is. 

Mr. Fordney: Oh, for a short period, you say. Y'as it not for three or four months? 

Mr. Lowry: No; it started to advance on the 5th day of July from 5c. 

Mr. Fordney: Mr. Lowry, is not this true, that in October, when domestic beet sugar came on the 
market, your company, the Federal Sugar Refining Co., dropped its price from about yjjc per pound to 
5.75c per pound when the beet sugar was put on the market at 5.55c? 

Mr. Lowry: No; beet sugar Avas put on the market the latter part of August, coming on from Cali¬ 
fornia. California beet sugar was sold A^ery late in August that year. 

Mr. Fordney: There is no beet sugar made- 

Mr. LoAvry: (interposing): Of course, Mr. Fordney, if you just pick out particular dates- 

Mr. Fordney (interposing) : There Avas no beet sugar made in August and put on the market in 

the Eastern States? 

Mr. LoAvry: There Avas in California. 

Mr. Fordney: I mean in NeAV York? 

Mr. LoAvry: California produces a great deal more sugar than they use there and it is shipped East. 

Mr. Fordney: Mr. Chairman, I appeal to you that the gentleman is aA'oiding ansAvers to my ques¬ 
tions and making an argument. He has already had full time in Avhich to make his argument, and I Avant 
him to ansAver my questions noAV, if he Avill. 

The Chairman: Mr. LoAvry, you Avill please ansAver Mr. Fordney’s questions. You haA'e the privi¬ 
lege of ansAvering the questions in your OAvn Avay, but please try to ansAver his questions. 

Mr. Lowry: I Avill. 

Mr. Fordney: Is it not true that after domestic beet sugar was off the market in 1911 the refiners 
of sugar advanced the price as high as $7.50 per hundred pounds in NeAv York? 

Mr. LoAvry: No; the big advance began in July, and culminated in September and October, Avhen 
the new crop of sugar in Europe came on the market. They advanced refined sugar as raAv sugar ad¬ 
vanced, as the Avorld’s A^alues advanced. 

Mr. Fordney: Well, I Av'ill get to that in just a minute. I Avant to knoAv about this noAv. 

Mr. LoAvry: All right. 




“SUGAR AT A SECOND GLANCE” 65 

Mr. Fordney: Is it not true that when beet sugar came on the market your price dropped abnor¬ 
mally, I mean the price at which your company sold sugars for in the New York market? 

Mr. Lowry: Beet sugars were on the market during the whole period. 

Mr. Fordney: No; they were not. I beg to differ with you. 

Mr. Lowry: Suppose I quote some prices or put them in the record? We have had some corre¬ 
spondence on the subject, and this paper covers the thing clearly, and I will just put in the whole record: 

COMMITTEE OF WHOLESALE GROCERS, 

New York, January 18, 1912. 

Dear Sir: Knowing that you are interested in the tariff on sugar, I would like to give you an idea of 
the extremes to which the domestic industry will go in order to have the Government maintain the present 
high tariff rate, which grants such a heavy subsidy to this industry. 

Mr. Frederick R. Hathaway, of the Michigan Beet Sugar Co., prepared an affidavit, which the Hon. 
J- W. Fordney, Congressman from Michigan, and member of the Hardwick investigating committee, filed 
with the committee on December 6. Mr. Hathaway’s affidavit shows the price quoted by the various New 
York refiners from September i to November 20, ranging from 6.25c to 7.50c. The price quoted by the 
Michigan Sugar Co. on the same dates is not given. He goes on to state that the “Michigan Beet Sugar Co. 
began delivery of this season’s sugar on October 12, 1911: that up to and including November 18, 1911, it 
had invoiced 860 cars of sugar,” and concludes with the following statement: “Deponent further states that 
of the total amount of sugar invoiced by the Michigan Beet Sugar Co., as above stated, from October 12 
to November 18, A. D. 1911, 94.1 per cent, was invoiced on the basis of $5.55 per hundred pounds, or 5.55c 
per pound.” The purpose of this affidavit is to have the uninitiated believe that the Michigan Sugar Co. 
assumed a charitable role this year and sold their sugar at a relatively lower price than that quoted by 
the New York cane-sugar refiners. In other words, that during the recent spectacular advance in sugar, 
the domestic sugar industry stepped into the breach and “saved the day” by selling sugar to consumers at 
a concession, thereby protecting them from the “extortion” of the New York refiners. 

The attitude assumed by them is perhaps best shown in the testimony of the writer before the Hard¬ 
wick committee last December when being questioned by Mr. J. W. Fordney, of Michigan, the champion 
in the House of Representatives of the beet-sugar industry (p. 3362) : 

Mr. Fordney: What justified you, your firm, in selling September sugar at 7.25c per pound, when 
the domestic industry shortly afterwards, as soon as their sugar began to go on the market, sold for 5.55? 
What caused you to come down on the price? 

Mr. Lowry: They sold for what? 

Mr. Fordney: 5.55. 

Mr. Lowry: Do you not know that the domestic industry was at that time quoting 6.50c a pound? 

Mr. Fordney: No. 

Mr. Lowry: I know that it was. 

Mr. Fordney: I put an affidavit in the record on that. 

Mr. Lowry: Well. * * * 

Mr. Fordney: They had no sugar in the market in September. They had none until their season 
opened, on October 12, and they began selling at 5.55 f. o. b. factory. 

Mr. Lowry: And when did they begin selling at 5.55? 

Mr. Fordney: As soon as the season opened. 

Mr. Lowry: Not at all. They began when cane sugars were selling at 5-65. 

Mr. Fordney: I beg your pardon. I looked up the records themselves, the bill books and the in¬ 
voices, and on October 12, when the season opened, they quoted sugar at 5.55 and sold it at that, and 
continued to sell. They sold 809 carloads out of about 850 carloads at that price, 5.55, while your firm was 
selling at 7.25. 

After further testimony on other matters, the question ot the selling prices of beet and cane sugar 
was reverted to by Mr. Fordney, and the following testimony ensued (p. 3381) : 

Mr. Fordney: And all this time Michigan sugar was sold by the Michigan Sugar Co. and all other 
factories in that State at 5.55. 

Mr. Lowry: Is not that because they used bad judgment? 

Mr. Fordney: Well, they may be a pack of fools, but they are generally intelligent enough there in 
New York. 


66 


“SUGAR AT A SECOND GLANCE” 


Mr. Lowry: They sold out at that price because they thought it was a good figure; and I will 
tell you that they were blamed sorry when the market got up to 6.50 that they had sold out. 

Mr. Fordney: No; it was when sugar was at 6.50 that they were selling it at that. 

Mr. Lowry: No; you are wrong on that. 

Mr. Fordney: How do you know I am wrong on that? I saw their books. 

Mr. Lowry: My business, Mr. Fordney, is to sell sugar, and I keep pretty good track of what is 
going on. 

Mr. Fordney; But you do not know anything about what the Michigan man’s mind is, and what his 
contracts are, or anything about it. 

Mr. Lowry; The Michigan man is the same as a man anywhere; he wants to get the highest price 
he can. He sells his sugar at the highest price he can get for it, and he sells it when he thinks the market 
is right; and if he has misjudged the market he is very sorry. 

The idea, of course, is to assume the air of virtue from the fact that the Michigan Sugar Co. mis¬ 
judged the market, thereby deceiving our legislators into believing that the Michigan Sugar Co. really did 
something to prevent the public from paying too much for their sugar during the recent rise. 

To prove my statements I refer to the following; 

Under date of August 16 Messrs. Turner Bros., sugar brokers of New York City, in their daily mar¬ 
ket report stated: » 

“New crop beet granulated can now be purchased for October shipment on the basis of 5-55^, cash 
less 2%, for shipment to Pittsburgh and points west, and basis 5.65c cash, less 2%, for shipment to Utica, 
N. Y., Scranton, Pa., and points west thereof.” 

On that date eastern refiners were quoting granulated for immediate shipment as follows: 

American Sugar Refining Co., 5.75c; National Sugar Refining Co., 5.85c; Arbuckle Bros., 5.85c; Fed¬ 
eral Sugar Refining Co., 5.95c; Warner Sugar Refining Co., 5.85c; Franklin Sugar Refining Co., 5.75c. 

W. H. Edgar & Son, sugar brokers of Detroit, state in their circular of August 18: 

“In the regular beet territory (Pittsburgh, Buffalo, and west) new crop Michigan granulated is now 
offered for shipment after the commencement of operations at buyers’ option during October basis 5.55c, 
without guaranteed.” 

A. H. Lamborn & Co., sugar brokers of New York City, in their market report under date of Au¬ 
gust 29 state: 

“Advices from the interior state that the domestic beet refiners have practically disposed of their 
October production, and to-day’s prices have advanced to the basis of 6.05c.” 

October 12, the date Mr. Fordney refers to, was a holiday in New York, but under date of October 
13 Messrs. Turner Bros., in their market review of that date, stated: 

“New crop beet granulated is quoted to-day on the basis of 6.50c cash less 2%, to Utica and Scran¬ 
ton and points west thereof, carrying the same eastern basis of rail freight. These sugars can be pur¬ 
chased for shipment in turn during November.” 

On that same date eastern refiners were quoting granulated for prompt shipment as follows; 

American Sugar Refining Co., 6.75c; National Sugar Refining Co., 6.75c; i\rbuckle Bros. 6.75c; Fed¬ 
eral Sugar Refining Co., 6.75c; Warner Sugar Refining Co., 6.75c; Franklin Sugar Refining Co., 6.75c. 

On my return to New York I wrote Congressman J. W. Fordney, as follows; 

Hon. J. W. Fordney, New York, December 14, 1911. 

Congressman from Michigan, Washington, D. C. 

Dear Sir: When I was on the stand last Saturday you made the claim that the Michigan Sugar 
Co. had sold sugar at 5.65 cents basis, when the New York refiners were quoting 6.75 cents. This I denied, 
stating that the Michigan factories unquestionably sold at 5.65 cents, but they did it when the New York 
refiners were selling at 10 points higher, or 5.75 cents, which was some time in August. In other words, the 
5.65 cents price looked so good to the Michigan Sugar Co. that they anticipated the market in August 
and made contracts at this figure, for delivery as soon as possible, with the understanding that this would 
be some time in October. In this I was absolutely correct, and it is unfortunate that we did not have Mr. 
Hathaway’s affidavit before us when we were arguing this point. Carefully reading Mr. Hathaway’s state¬ 
ment, you will note that he does not make the claim that you did. He merely gives the price at which the 
sugars, delivered in fulfillment of contracts, is invoiced, making no mention as to the date the sales were 
made. The Michigan Sugar Co. having no philanthropic motives in mind had simply misjudged the market 
and sold too soon, as I claimed. Of course I recognize that Mr. Hathaway’s statement is misleading. 


“SUGAR AT A SECOND GLANCE” 


67 


both to you and to the public, and was intended to be so, just as his statement to the Ways and Means 
Committee in 1908 (which President Warren did not contradict), to the effect that the American Sugar 
Refining Co. had no interest in the Michigan Sugar Co. was intended to mislead them. In the present 
instance the Michigan Sugar Co. is trying to assume the air of virtue, from the fact that they misjudged 
the market. I might add that for this same reason some New York refiners in October were still deliv¬ 
ering sugar at 5 cents, which was sold by them before the advance. 

As your statements were very emphatic on the point, and as it is clear that the statement misled you, 
it seems to me that you should take occasion at the earliest opportunity to correct the false impression 
that one, not knowing the facts, would get from reading the evidence. 

Respectfully yours, 

FRANK C. LOWRY. 

P. S.—I am sending copies of this letter to other members of the committee. 

Under date of December 16, 1911, Mr. Forney replied as follows: 

Mr. Frank C. Lowry, 

138 Front Street, New York, N. Y. Washington, D. C., December 16, 1911. 

My Dear Sir: Replying to yours of the 14th, would say your story, as set forth in your letter, is 
quite in keeping with what you have stated heretofore in my presence, and incorrect. Your figures ai*c 
not correct and your conclusions are not correct. You would evidently present any argument 10 mislead the 
public to believe that free trade on sugar would inure to the benefit of the consumer, when, in fact, it 
would benefit only those interested in refining imported raw sugar. 

The beet-sugar industry is here to stay, and I firmly believe the present rate of duty on imported 
raw sugar will not be disturbed for some time to come. Certainly not while the Republican Party is in 
power, for the Republican Party does not seem willing to swell the coffers of men engaged in refining raw 
sugar and to aid in the destruction of a magnificent industry, now giving aid in a most substantial manner 
to the consumers of sugar in the United States. I am, 

Very truly, yours, 

J. W. FORDNEY. 

My answer to this letter follows under date of December 18: 

Hon. J. W. Fordney, 

House Office Building, Washington, D. C. New York, December 18, 1911. 

Dear Sir: I have to acknowledge your letter of December 16, and have read same with interest. 

I appreciate that history shows that many statesmen have taken the easiest, if not the most honor¬ 
able way, of disposing of a displeasing statement of facts made by the opposition, by the simple method 
of calling the man a liar, at the same time taking very good care not to attempt to prove the latter statement. 
If you desire to prove that every statement which I made to you in my letter of December 14 is correct, 
write to any broker handling Michigan beet sugars: Chicago would, perhaps, be the best market, and the 
largest brokers there are: Meinrath Brokerage Co., F. C. Van Ness, Chester Hogle, Wm. F. Havemeyer 
& Co., and in Detroit you can write to Mr. Goodlow Edgar, of Wm. H. Edgar Co. (the latter company 
has for many years worked hand in glove with the American Sugar Refining Co., receiving special rebates 
for distributing their product, etc.). 

When Mr. Hathaway is brought right to the point, I do not believe that he himself will deny the 
statements which I have made regarding this affidavit of his, or will deny that the beet-sugar factories of 
Michigan this year based their selling price on the cane-sugar refiners’ quotation, just as they have always 
done, and when they sold their sugar at 5.55 cents, 5.65 cents, and 5.75 cents, etc., the New York refiners 
were making sales at the usual difference, or 10 points higher than these figures. In fact, it seems to me 
that a careful analysis of Mr. Hathaway’s affidavit shows this. He himself admits that they sold sugar as 
high as 6.40 cents, and an examination of their books will show that at that time they were so thoroughly 
sold out they had little or no sugar unsold for delivery prior to December i. 

An attempt has been made to show that the Michigan Sugar Co. sold to their customers at 5.55 cents 
to 5.65 cents when the New York refiners were selling at 6.75 cents. This is the statement which you made, 
and it is not correct. This is not a theory of mine, but a statement of facts, and can be readily proved by 
you if you desire to do so. I was under the impression that your statement was the result of an incorrect 
conclusion you had drawn from Mr. Hathaway’s affidavit, which was obviously made up with the view 
of concealing the real facts, and with the desire to have their attitude improperly construed by the public. 


68 


"SUGAR AT A SECOND GLANCE” 


just as it was by you. Unless you make some effort to ascertain the facts and correct this false impression 
I am forced to the conclusion that your attitude on this important matter coincides with Mr. Hathaway s. 

In reply to your intimation that the public would not benefit by a reduction in the duties on raw 
and refined sugar, 1 refer to Messrs. Willett & Gray s table of refined-sugar prices for the year 1891, which 
I sent to Mr. Malby last week, and copy of which I inclose herewith, showing conclusively that when the 
tariff on sugar was removed the price of refined sugar to the consumer was reduced cents per pound in 
one week. 

Naturally I am interested in your statement to the effect that the Republican Party will not reduce 
the duty on sugar while it is in power, but will continue its policy of failing to keep faith with its pledges 
to the people. The present sugar tariff or half the present rate can not be defended on the theory of pro¬ 
tecting American industries to the extent of "the diff'erence in cost of production between here and abroad.’ 
Such a course will unquestionably lead to the retirement of the Republican Party from power after March 4, 
1913. I am, respectfully, yours, 

FRANK C. LOWRY. 

Receiving no reply to this letter I again wrote Congressman J. W. Fordney, under date of January 
9, as follows: 

Hon. J. W. Fordney, New York, January 9, 1912. 

House of Representatives, Washington, D. C. 

Dear Sir: I have had no reply to my letter to you of December 18, 1911, and am naturally curious 
to know whether or not you intend correcting in the record the misstatement which you have made, re¬ 
garding which we have had some correspondence. 

Yours, respectfully, 

FRANK C. LOWRY. 

I am still without any reply to the above. 

To me this example clearly shows the extent to which those who profit by high protection will go t':" 
conceal the real facts in their effort to confuse our legislators and the public generally. 

I give you this simply as a matter of information. 

Yours, very truly, 

FRANK C. LOWRY, 

Secretary. 

COMMITTEE OF WHOLESALE GROCERS, 

New York, March i, 1912. 

Dear Sir: As an indication of how incorrect is the claim that the beet-sugar producers of the 
United States sell their sugars at low prices for the benefit of the American consumer, I would call atten¬ 
tion to the fact that in anticipation of higher prices the beet-sugar producers have for several weeks with¬ 
drawn their product from the market, notwithstanding the fact that about 25 per cent, of the beet sugar 
produced in this country during the last campaign is still unsold. 

The situation is well covered by Willett & Gray’s Weekly Statistical Sugar Trade Journal of Feb¬ 
ruary 29, from which I quote as follows: 

“The beet-sugar factories are still quoting 5.90 cents, less 2 per cent., and thus practically withdrawn 
from the general market.” 

Prices of the New York cane-sugar refiners are to-day on the basis of 5.80 cents. 

This action of the beet-sugar factories in withdrawing their product in the hope of getting still 
higher prices is taken in face of the fact that prices are to-day a half a cent higher than the lowest price 
touched since the first of January and fully 2 j 4 cents a pound above the cost of producing beet sugar. 

Based on the beet-sugar men’s figures given before the Hardwick investigating committee, it was 
shown that beet sugar could be produced at less than 3 cents a pound, and that the average cost was y/2 
cents a pound. On the latter basis, which is known to be high, to-day’s price would show the beet-sugar 
men a profit of about 70 per cent, over their cost of production. It would, therefore, be reasonable to ex¬ 
pect th’at the dividends of 33 1-3 per cent, paid by the Michigan Sugar Co., and 100 per cent., paid by the 
Union Sugar Co., of California, last year would be bettered this year. 

This is not a criticism of methods, but simply a desire to call attention to the fact that these gentle¬ 
men are in business to make as much money as possible, and any attempt to deny the fact only proves 


“SUGAR AT A SECOND GLANCE” 


09 


that the man making the claim is either not familiar with the situation or is wilfully attempting to mislead. 

Respectfully, yours, 

F. C. LOWRY, 

Secretary. 


In Mr. Hathaway’s testimony, by picking out quotations in particular markets on certain dates last 
fall, he now endeavors to make it appear that the beet-sugar producers did not follow the usual custom 
of basing their price on the New York refiner’s quotation plus the freight from New York to destination. 
I recognize that the committee is not interested in “special prices” that are made at some stated time, but 
is interested only in what is the custom of the trade. And it was clearly shown in the evidence taken be¬ 
fore the Hardwick committee that the custom of the domestic producer is to base his price on the New 
York refiner’s quotation, delivered at various destinations throughout the interior of the country. As this 
includes freight from seaboard to destination, it is apparent that the price in the interior is higher than 
at New York. The domestic beet-sugar men were very anxious to dispose of their sugars rapidly this 
season, because they recognized that the higher prices obtained in the fall of 1912 would not prevail after the 
ist of January, 1913, when Cuba sugars would come on to the market in free supply, and for this reason 
they at times anticipated the market. Their position is well covered by the following market report, issued 
to the trade on December 6: 

“With the large Cuban crop staring them in the face, and the certain knowledge that as soon as 
this Cuban sugar becomes available, prices will recede rapidly, it is not surprising that the domestic beet 
factories are pushing the sale of their sugar, so as to dispose of as much as possible on to-day’s market, 
rather than hold it until after the first of the year, when they will have to compete with low-priced cane 
sugars. Prices are therefore quite irregular.” 

That their judgment was correct is shown by the fact that between January i and 21 the price of 
refined sugar in New York declined 45 points. It will be observed that this decline was not due to any pres¬ 
sure of domestic sugar, but was due to the fact that the new Cuban crop was being harvested and was 
being received by our refiners at lower prices. 

Quotations for granulated sugar at New York (cents per pound net cash). 



1911. 

1910. 

1909. 

1908. 

1907. 

1906. 

Average Jan. i to July i. .. . 

. . 4.720 

5-015 

4-653 

5-036 

4.646 

4-405 

Average July i to Dec. 31. . 

.. 5.969 

4.929 

4.874 

4.878 

4-650 

4-619 

Average for year. 

•• 5,345 

4.972 

4-765 

4-957 

4-649 

4-515 

New York, November 4, 1912. 

Mr. Fordney: When I want you 

to quote 

prices I 

will ask 

you. I 

WILLETT & GRAY. 

am probably quite as familiar 


with them as you are. 

Mr. Shackleford; For the benefit of the committee, I hope only one witness will testify at a time. 

The Chairman : Let him put the figures in the record for the benefit of the committee. 

Mr. Lowry; I have handed them to the reporter. 

Mr. Fordney: All right, put them into the record; but, at the same time, I want my question 
answered. Beet sugar was offered on the market on the 12th day of October, according to the testimony 
given before the Hardwick committee, and at $5.50 per hundred pounds- 

Mr. Lowry (interposing) : That- 

Mr. Fordney (continuing) : Let me put my question. And within a very few days thereafter refined 
sugar in New York dropped from 7)4 to 5.75 cents. Is that not true? 

Mr. Lowry: It did drop from 7)4 to 6.75 cents. 

Mr. Fordney: Is it not true that there was testimony furnished here by affidavit, as a part of the 
statistics of the Treasury Department, that the average price of raw imported sugar during that year and 
during that period was 2.74 cents in bond in New York? 

Mr. Lowry: No; it was not that- 

Mr. Fordney: Whereas your prices for refined sugar were quoted on prices for European raws, and 
there was not a pound of European raws coming into this country? 

Mr. Lowry: This 1911 we are talking about- 

Mr. Fordney (interposing) : Is that not true? 














70 


“SUGAR AT A SECOND GLANCE” 


Mr. Lowry: The average margin between raw and refined sugar in 1911, according to Willett N 
Gray, was $0.89 per hundred, a normal margin. 

Mr. Fordney: What raws are you talking about? 

Mr. Lowry: The ditterence between the duty paid value of raw sugar and the refiners’ selling price. 
That shows the margin between raw and refined for that year was nothing more than normal. 

Mr. Fordney: European raws, you are talking about? 

Mr. Lowry: No; the raw sugar actually received. 

Mr. Fordney: Your prices for the year, you say, are based upon European raws cpioted on the 
market and as furnished by Willett & Gray? : 

Mr. Lowry: 1 beg pardon. The price of refined sugar during that year was based upon the price 
that refiners were paying for raw sugars plus the margin which covered the cost of refining, as it always is. 

Mr. Fordney: Mr. Chairman, I want to state now that in the Hardwick hearings you will find the 
price of refined sugar in New York in July, August, and September, 1911, was based upon European raws, 
and that I now file and put into this record a statement showing that the price for raws during that time 
was $2.74, less the duty, and yet that refined sugar sold as high as 7^2 cents per pound in New York, and 
that when beet sugar was put on the market in October, 1911, New York refined sugar dropped to 5.75 
cents. The following was put in the record by Mr. Fordney: 

Mr. Fordney: * * * I want to know what the Federal Sugar Refining Co. sold sugars for? 

Mr. Lowry: The Federal Sugar Refining Co. and other refineries on July 6 advanced their price 
from 5 to 5.1. * * Now, the market advanced right on up to 6.75, and the trade kept buying on each 

successive advance. * ''' * The demand came on to us so fast we could not take care of it and we went 

to 7 cents. Arbuckle & Co. were delivering promptly, and they went to 7 cents. We were about 10 days 
oversold at the time, and Arbuckle was the only refiner prepared to give immediate delivery, and he jumped 
his price to 7.5. * * * We wanted to keep in the market and supply our customers right along, and we 
put the price at 7.25, and at 7.25 the market stopped, and from that time on, whether we talk about beet- 
sugars or cane-sugars, the market became absolutely a jobber's market. The beet-sugar price was 6.5 cents. 

Mr. Lowry: Is the object of that c[uestion to show that beet-sugar men sell their sugars at a lower 
price than they can get for them in the market? 

Mr. Fordney: They did that year, did they not? 

Mr. Lowry: There never was any charity business that year, and never was in any year. 

Mr. Fordney: Did they not put beet sugar on the market at $5.55 when you were selling at 7F1 
cents in New York? 

Mr. Lowry: No, sir. 

Mr. Fordney: I say the record shows that is the testimony. 

Mr. Lowry: I say the record is incorrect, then. They sold these sugars in August for $5.55, when 
our price was $5.65. 

Mr. Fordney; I am not talking about beet sugar on the market in August, but it was in the record 
that way. There was no beet sugar at all put on the market in August, and- 

Mr. Lowry (interposing) : The price of-- 

Mr. Fordney (continuing) : Let me take just a minute and finish my question. They put sugar on 
the market in October, 1911, and then when you dropped your price from 7J4 to 5.75 cents they put their 
sugars on the market at 5.55 cents and when you were selling at 7F; cents. Is that not a fact? 

Mr. Lowry: If you will look in the record of the Hardwick committee investigation- 

Mr. Fordney (interposing); Is that not true? 

Mr. Lowry; You will find that the price for domestic beet sugar followed the market as it always 
has and advanced or declined as world s values advanced or declined. You will find on page 3372 of the 
Hardwick hearings testimony to show that from the high point reached in September until the early part 
of December the London sugar market declined 2s. qd., or 66 cents a hundred pounds, and that American 
beet sugar during the same period dropped 60 points from their high figure. 

Mr. Fordney: Mr. Lowry, you stated a few minutes ago that refined sugar sells on the Pacific coast 
at a higher price than in the East? 

Mr. Lowry; Yes. 

Mr. Fordney: Is it not true that the sugar imported on the Pacific coast to be refined is prac¬ 
tically all free sugar coming into this country? 





“SUGAR AT A SECOND GLANCE’’ 


71 


Mr. Lowry: All sugar used on the Pacific coast is free sugar, either being domestic beet or domes¬ 
tic cane or Hawaiian sugar. That is what I said in my testimony. 

Mr. Fordney: From Hawaii or the Philippines? 

Mr. Lowry: Well, from the Philippines; a trifle; not very much. 

Mr. Fordney: That sugar is not refined by the sugar-beet men? 

Mr. Lowry: No; it is refined by the Western refinery and the C. & H. refinery. They both take 
advantage of the tarifi in the same way. 

Mr. Fordney: In the American Sugar Refining Co.? 

Mr. Lowry: No; I understand the America” Sugar Refining Co. now state they have no interest in 
the Western Refining Co. They had up to about a year ago, 1 think; and since the American Sugar Re¬ 
fining Co. has no control of the Western Refining Co. it may be fair to state that they have got the price 
higher than for a year or so previously as compared with the New York price. 

Mr. Fordney: According to your own statement, consumers of sugar on the Pacific coast are pay¬ 
ing more for their sugar than consumers of sugar on the Atlantic coast, whereas raw sugar comes in free 
on the Pacific coast and pays a duty on the Atlantic coast? 

Mr. Lowry: They pay more for sugar that does not pay any revenue to the Government. 

Mr. Fordney: Then, the tariff has nothing to do with the price which the consumer has to pay? 

Mr. Lowry: Yes, sir; it has everything to do with the price the consumer has to pay out there, as 
their price is based upon the in-bond value of foreign sugars, plus the duty and cost of refining and not 
upon the cost of production. 

Mr. Harrison: Was not the effect of admitting Hawaiian sugar there merely to raise the price of 
Hawaiian sugar to the level of the price of sugars in this country? 

Mr. Lowry: Precisely. 

Mr. Harrison: In other words, the tariff wall was not opened up wide enough to let in enough world 
competition to lower the price? 

Mr. Lowry: Exactly. They just let in a small amount, and that let in took advantage of the tariff" 
and boosted their price. ' \ 

Mr. Fordney: If that were the case and you put sugar on the free list the consumer on the Atlantic 
coast would not get any advantage; you would just hold up the price? 

Mr. Lowry: Mr. Fordney, there are any number of gentlemen in this room representing the domes¬ 
tic industry who are prepared to testify that if you take the duty off sugar there will be a corresponding 

reduction in the price of sugar to the consumer, and that is why they don’t want it done. If you will 
refer to the Hardwick Committee Hearings, pages 3547 and 3554, you will find that Mr. Willett of Willett 
& Gray gave a very clear example of the effect of the tariff on the price of sugar. He stated: 

“All the analyses of changing from duty to free sugar show that whenever duty is taken off the cost 
of refining decreases, and when the duty is added the cost of refining increases, but these analyses also show 
that whenever duty is taken off the consumer gets the full benefit of the amount of duty taken off and 

also a part of the lower cost of refining, and whenever the duty is increased the refiners bear a certain 

portion of the increase and the consumer does not pay the full addition of the duty.” 

And on page 3554 the following passage occurs: 

“I would like to have the committee satisfied that any reduction of the duty goes to the consumer 
and any addition of the duty is paid by the consumer in any year under any duty which differs from any 
other duty, making necessary allowances for market fluctuations affected by supply and demand.” 

Mr. Fordney: I was simply following out the logic of your contention and not stating what I be¬ 
lieved. But just let me ask you a question along that line: When you had the opportunity, when you had 
a clear field, when there was no domestic beet or cane sugar on the market in 1911, in what way did you 
apply your philanthropic ideas to the consumer? 

Mr. Lowry: We never had a clear field in the selling of sugars. What difference does it make 
whether we compete with cane or beet-sugar? 

Mr. Fordney: You stated a few minutes ago that because of the higher cost of production of beet 
sugar a higher duty was demanded by manufacturers of beet and cane sugars? 

Mr. Lowry: That seems to be the object of putting the cost high. 

Mr. Fordney: Has it not been shown here that since the beet-sugar industry began in this country 
the cost of production has been materially lowered? 

Mr. Lowry: And their profits materially increased—correspondingly increased. 


72 


“SUGAR AT A SECOND GLANCE” 


Mr. Fordney; That is not what I asked you. I asked you if the cost of production has not been 
materially lowe.'M? 

Mr. Lowry: I should think it would be; and here we have an indication of the domestic producers’ 
greed. Ten years ago they urged that if they could only have lo years of the present basis of tariff bounty 
they would be prepared to work under lower tariff rates. They have had those lo years and, although we 
find them much fatter than lo years ago, they still stick their forefeet comfortably in the tariff’ trough and 
are unwilling to make any concession to the consumer by removing even one of those feet, notwithstanding 
the fact that even you admit that during this period they have very materially reduced their cost of opera¬ 
tion. 


Mr. Fordney: Is it not true that every particle of legislation since that time affecting sugar has 
been to lower the tariff on sugar? 

Mr. Lowry: Well, there has been practically no legislation to lower the tariff' since the bill of 1897, 
with the exception of 20 per cent, rate on Cuban sugars, a part of which the Cubans get and a part of which 
the consumer in the United States gets. 

Mr. Fordney: Mr. Lowry, let me- 

Mr. Lowry (interposing) : On this point let me say- 


Mr. Fordney (continuing) : Let me get tnis straight while I am at it- 

Mr. Lowry: This clears it up- 

Mr. Fordney (continuing) : It is true that since the sugar-beet industry began in this country the 
duty on sugar from Cuba has been lowered 20 per cent? 

Mr. Lowry: Yes. 

Mr. Fordney: Is it not also true that Porto Rican sugar comes in free since that time? 

Mr. Lowry: Yes. 

Mr. Fordney: Is it not further true that Philippine sugar comes in free since that time? 

Mr. Lowry: Up to 300,000 tons. 

Mr. Fordney: So that it is true, as I stated in my former question, that every particle of legislation 
affecting the duty on sugar since the beginning of the beet-sugar industry in this country has been to lower 
the duty and increase competition with free sugar or sugar bearing lower rates? 

Mr. Lowry: The legislation has been toward giving the Philippines, Hawaii, and Porto Rico the 
benefit of our high tariff wall. 

Mr. Fordney: Even if you prefer to put it that way, that is all of the legislation there has been 
aft’ecting sugar, so that my statement is true, is it not? 

Mr. Lowry: We were talking a few minutes ago about the price of sugar- 

The Chairman: If you will allow me to suggest right there, Mr. Fordney, do not overlook the 
fact that the American flag is floating over Hawaii, and that legislation affecting her production of sugar 
is not in fact a lowering of the tariff wall. 

Mr. Fordney: And I want to say to the chairman that we got sugar from Hawaii long prior to the 
period when the American flag began to fly over Hawaii. 

The Chairman: I understand, but Hawaii is a part of this country, and in speaking of Hawaiian 
sugar coming in free, I thought your statement might be misunderstood. 

Mr. Fordney: I am not referring to Hawaii, or at least I did not bring it up ; the witness did. 

Mr. Lowry: As an indication of the effect on the market of beet sugar, which comes on the market 
in the fall, let us take the prices for the last six months and the first six months of the following years 
and compare them: 

1911: 

Average from January to July.$4-72 per 100 pounds 

Average from July to December.$5-96 per 100 pounds 

Average for the year.$5-34 per 100 pounds 

Which was higher, as you will notice, during the last six months. 

1910: 

Average from January to July.$5-05 per 100 pounds 

Average from July to December.$4-92 per 100 pounds 

1909: 

Average from January to July.$4.65 per 100 pounds 

Average from July to December.$4-87 per 100 pounds 














“SUGAR AT A SECOND GLANCE” 


73 


Average for the year.$4-76 per loo pounds 

1908; 

Average from January to July- 

Mr. Fordney: To expedite matters you can put that in the record. 

Mr. Lowry: I believe it is in. It shows that for the six years compared three of the years sugar 
was higher during the last six months and during three years it was a tritle lower. It shows that beet 
sugar follows the markets of the world. 

Mr. Fordney: Is it not true that domestic beet sugar sold in New York this fall cheaper than 
your price? 

Mr. Lowry: Yes, and cheaper than it did in Colorado. It sold in Colorado for 5.20, whereas it was 
shipped to New York and paid freight charges 80 cents and there sold for 4.6 cents per pound. 

Mr. Fordney: It sold for a less price in New York than you were selling your sugar for, and you 
were obliged to close your factory on account of it? 

Mr. Lowry: No, not at all. 

Mr. Fordney: Did you not stop sales? 

Mr. Lowry: No; why, gracious me, no. They have sold—oh, well, I don’t know how many car¬ 
loads they have sold—but certainly not enough to close our factory. But when the people of Colorado 
were paying a higher price they- 

Mr. Fordney (interposing) : Just answer my question. I know you very well. 

Mr. Lowry: I expect you do. 

Mr. Fordney: You are wound up for all time to come. When you sold sugar for 4.90 cents in New 
York the domestic beet sugar undersold you this fall, did it not? 

Mr. Lowry: They have to or they would not sell it at all. 

Mr. Fordney: Did they not do it? 

Mr. Lowry: Yes, 10 cents per hundred. You know that beet sugar never sells for the price re¬ 
ceived for cane sugar, because the trade will not pay the same price for it. 

Mr. Fordney : Oh, my friend- j 

Mr. Lowry (interposing) : You understand that that is so? 

Mr. Fordney: I understand that you are a very resourceful arguer. (Laughter.) 

Mr. Lowry : Thank you. 

Mr. Fordney: You stated in your remarks a few minutes ago that the production of sugar in Lou¬ 
isiana was a great detriment to the people there, I believe? 

Mr. Lowry: I say that that is the statement many people in Louisiana make. 

Mr. Fordney: The statement was made before the Hardwick committee by a gentleman from 
Louisiana that more than half of the people of the State of Louisiana were now directly engaged in the 
production either of cane or cane sugar? 

Mr. Lowry: I do not know anything about their statements on the subject. 

Mr. Fordney: Well, that was the testimony. 

Mr. Lowry: But I do know that the claim is made that Louisiana would be far better off if they 
would cut the area of the State up into small farms and get away from the big plantation idea and pro¬ 
duce other crops. 

Mr. Fordney: That is the claim of the free trader, is it not, and not of the sugar grower or maiui- 
facturer down there? 

Mr. Lowry: No, sir; that is the claim of people in Louisiana who have no interest in the matter 
so far as I know. 

Mr. Fordney: You never heard a man engaged in the production of cane sugar in Louisiana make 
that statement? 

Mr. Lowry: No; not any man engaged in the production of cane sugar, but by people there who 
know the conditions. Yes; I have heard people in the business say so, but they were not engaged in 
production of cane sugar. 

Mr. Fordney: Are you secretary and treasurer of this W’holesale Grocers’ Association yet? 

Mr. Lowry: Yes, sir. 

Mr. Fordney: You stated before the Hardwick committee that there were no fees or annual dues 
or dues of any kind charged to members of your association? 






74 


“SUGAR AT A SECOND GLANCE’’ 


Mr. Lowry: Yes, sir; and the situation is precisely the same as when I stated it to the Hardwick 
committee and to the Finance Committee of the Senate. 

Mr. Fordney: None collected from the members of that association? 

Mr. Lowry: That is right. They contribute work only. 

Mr. Fordney: You stated that there was never a meeting held of even two or three members 
of the committee? 

Mr. Lowry: No; l)ut there have been meetings, as I see these people frequently. 

Mr. Fordney: I know that you represent them and write them and go around and see them occa¬ 
sionally? 

Mr. Lowry: Yes, sir. 

Mr. Fordney: So that there is a meeting of at least two members when you and another fellow 
are together? (Laughter.) 

Mr. Lowry: I think that is correct. 

The Chairman: Order, gentlemen. 

Mr. Fordney: You stated further to the Hardwick committee that the only money you had ever 
had contributed for this effort to secure free sugar had been given by Mr. Spreckels, president of the 
Federal Sugar Refining Co., some $12,000? 

Mr. Lowry: Yes, sir. 

Mr. Fordney: Does that continue? 

Mr. Lowry: Yes, sir; no change in the situation. 

Air. Fordney: So that all of the money produced for your use in advertising comes from the Fed¬ 
eral Sugar Refining Co., or its president; is that right? 

Air. Lowry: Yes, sir; that is right. And right here I will put into the record a statement that I gave 
to Chairman Hardwick of the Special Committee Investigating the American Sugar Refining Co., and 
which he incorporated in his speech, showing exactly who our committee was, what it was, and what it 
stood for. 

Air. Hardwick: Air. Chairman, before I proceed to a discussion of another branch of this ques¬ 
tion, I wish to insert in the record, as a matter of simple justice to him, a letter from a gentleman who has 
been previously assailed in this debate by opponents of this bill, and who has been severely criticized all 
over the country by the beneficiaries of the sugar tax. It seems to me that these gentlemen think that it is 
perfectly proper for any gentleman to favor a retention of duties for the “protection” of the industry in 
which he is interested and conduct as active and as aggressive a propaganda to save his “protection” as he 
may desire, but that it is hardly short of a crime for anybody who speaks for the millions of American 
consumers and urges a reduction of tariff' burdens to conduct a propaganda in support of that view. The 
gentleman to whom I refer has, in my judgment, done a great work for the people of the country by his 
aggressive and forceful advocacy of the removal of the duty on sugar, and while he has necessarily 
earned the ill will of the protected interest, because of his aggressive fight, he is undoubtedly entitled to 
the gratitude and the good will of every American consumer who has a grocery bill to pay. I refer to 
Air. Frank C. Lowry, of New York, sales agent for the Federal Sugar Refining Co., and secretary of the 
committee of wholesale grocers, and I invite the attention of the committee to the letter from him, which 
follows: 

Hon. Thomas W. Hardwick, New York, Alarch 18, 1912. 

Chairman Special Committee on Investigation of 

The American Sugar Refining Co., and others. 

House of Representatives, Washington, D. C. 

My Dear Sir: Those opposed to any reduction in the tariff' on sugar have endeavored to iDesmirch 
the standing of the Committee of Wholesale Grocers, of which I have served as secretary, because T 
am also in charge of the sales department of the Federal Sugar Refining Co., an independent refinery. 
There has at no time been any mystery as to who I was or where I stood on this important matter. 
Certainly I was very glad to have the opportunity to state it clearly to your committee when I appeared 
before them last July. The Wholesale Grocers’ Committee was formed in 1909 for the purpose, as stated 
on our letterheads, of “obtaining cheaper sugar for consumers through reduction of duties on raw and 
refined sugars.” I believed in the principle advocated, was instrumental in forming this committee, and 


“SUGAR AT A SECOND GLANCE’^ 


75 


have served as its secretary without any remuneration, direct or indirect, because the other members de¬ 
sired it. My name, and that of the other members of the committee, has appeared on all our stationery. 
We have been particularly careful about this, so that all might know exactly who was behind the move¬ 
ment. Had there been any desire on my part or that of the other members of the committee to conceal the 
fact that I was interested in this work, this would not have been done. 

With the exception of myself all our members are actively engaged in the wholesale grocery 

business. They are: Carl Schuster, Koenig & Schuster, New York City; Wb II. Baker, Baker & Co., 
Winchester, Va.; B. F. Persons, Parsons & Scoville Co., Evansville, Ind.; H. C. Beggs, Dilworth Bros. & 
Co., Pittsburgh, Pa.; R. E. Collins, Collins & Co., Birmingham, Ala.; A. S. Hammond, Monypeny-Ham- 
mond Co., Columbus, Ohio; G. Thalheimer, Syracuse, N. Y.; Henry Baden, Henry Baden & Co,, Inde¬ 
pendence, Kans.; F. J. Dessoir, R. C. Williams & Co., New York City; H. T. Gates, E. W. Gates & Co., 
Richmond, Va.; W. E. Small, the A. B. Small Co., Macon, Ga.; E. L. Woodward, E. L. Woodward & Co., 
Norfolk, Va.; A. Blanton, A. Blanton Grocery Co., Marion, N. C.; Jacob Zinsmeistcr, J. Zinsmeister & Sons, 
Louisville, Ky.; A. Brinkley, A. Brinkley & Co., Norfolk, Va.; R. E. Bentley, Bentley, Shriver & Co., Balti¬ 
more, Md.; John E. Talmadge, Jr., Talmadge Bros. & Co., Athens, Ga.; Isaac Horner, Henry Horner & 
Co., Chicago, Ill.; Edward Cumpson, T. & E. Cumpson, Buffalo, N. Y.; E. P. McKinney, McKinney & 

Co., Binghamton, N. Y.; H. Y. McCord, McCord-Stewart Co., Atlanta, Ga.; A. S. Webster, Webster 

Grocery Co., Danville, Ill. 

These gentlemen are from 14 different States, and the firms represented have a total rating of 
nearly $8,000,000. 

In the work we have been doing we have had the co-operation of a great many wholesale and retail 
grocery houses that are not members of the committee, but who would be glad to become members of 
it were it desirable to have the number increased. Furthermore, I am firmly convinced that 90 per cent, of 
the wholesale grocery trade of the country is in sympathy with our efiforts. The National Wdiolesale 
Grocers’ Association, as an organization, has not taken,any action regarding the tariff' on sugar, for the 
reason, as they have repeatedly stated, “As an organization we do not deal with political questions of any 
kind.” They leave matters of this kind to be dealt with separately by the various local organizations 
and individual members, and the petitions now filed with the Ways and Means Committee show how thor¬ 
oughly this has been done. I might mention, however, that the National Canners’ Association, with a mem¬ 
bership of over 3,000 firms, does not feel this way about it, but passed resolutions favoring a lower duty 
on sugar, and have instructed the chairman of their committee on legislation, Mr. Bert N. Fernald, to 
use his best efforts to bring about such a reduction. The National Bottlers’ Protective Association have 
acted in a similar way, the only difference being that their resolution calls for “free sugar.” 

Previous to the time this committee was formed, in 1909, the general public knew little regarding 
the details of the sugar tariff, and all our efforts have been along the lines of publishing the facts, feeling 
satisfied that if the people were informed what the tax was and its effect they would demand and receive 
the relief from the excessive rate to which they are clearly entitled. As a result of our efforts thousands 
of petitions asking for a reduction in the tariff on sugar have been sent to Congressmen signed by in¬ 
dividuals, firms, corporations, granges, civic associations, etc. Through these the signers have spoken for 
themselves and others who are in sympathy with the movement. These are the people who will hold their 
Congressman responsible for what he does or does not do to secure a lower tax rate on sugar. 

To distribute this information, besides requiring effort on the part of this committee, required 
funds, and the Federal Sugar Refining Co. has helped us financially. Investigation by your committee 
disclosed that the Federal Sugar Refining Co. was aljsolutely independent, having no affiliation, directly or 
indirectly, with the Sugar Trust. Consequently their interest in the lower duties is identical with that of 
the consumer. A lower tariff rate will reduce the price of sugar, resulting in an increased consumption, 
so that a larger business can be done at a reduced expense. 

The American Sugar Refining Co. is clearly on record as desiring no change in the present tariff, 
as reference to the Payne-Aldrich tariff hearings of 1909, pages 3430-3440, will disclose a letter and a brief 
filed by them, urging that the present tariff rate be maintained. Thus the line is clearly established witli 
consumers, manufacturers, dealers, and independent refiners desiring lower duties, and opposed to this is 
the Sugar Trust and their allies, the domestic sugar producers. 

As this committee think it should be clearly stated exactly who we are and also that the work we 
have done has been because we believe in the principles advocated, and for no other reason, we would 
appreciate if you can arrange to have this printed in the record. 

Very respectfully, yours, FRANK C. LOWRY, Secretary. 


76 


“SUGAR AT A SECOND GLANCE’’ 


Mr. Fordney: Why, there is not a Congressman nor a dealer in the country to-day who has not 
got a copy of that. 

Mr. Lowry: I am glad to know that, because 1 have certainly been engaged in an effort to get it 
into their possession. 

Mr. Fordney; Why, of course. You send it out with practically every barrel of sugar or pack¬ 
age of sugar that you send out, unless the purchaser .objects to it. 

Mr. Lowry: No; that list was never sent out with any sugar. 

Mr. Fordney; You send out letters, do you not, and make appeals for free sugar? 

Mr. Lowry: We send out statements showing it would be to the interest of the consumer; yes. 

Mr. Fordney; That is, that in your opinion it would be? 

Mr. Lowry: Well, we can not do any more than that. 

Mr. Fordney; Mr. Lowry, you stated that the labor cost in the production of sugar has nothing to 
do with the cost of sugar? 

Mr. Lowry: I say that the price of domestic sugar is not arrived at by taking their bases of cost 
and adding a fair margin to it. 

Mr. Fordney: No; you did not say that. 

Mr. Lowry: Well, I will read what I said. 

Mr. Fordney: Well, I would rather have the clerk to read it. 

Mr. Lowr^ : Let the clerk read it. He took it from the printed pamphlet, I believe. 

Mr. Fordney: I will waive that point. 

Mr. Lowry: You are so unsuspicious when the beet-sugar man is on the stand that I am surprised 
you should be so suspicious now. 

Mr. Fordney; I am suspicious of you and know you. 

Mr. Lowry: Yes; and I have proved several of your statements incorrect. 

Mr. Fordney: I have had from you a volume of this stuff you are putting into the record. I could 

not read it in a week if I were to make a great eff'ort, there is so much of it. You are all right and very 

proper, and fighting hard for free sugar. You have your reasons therefor. Now, then, you stated that 
the labor cost in the production of beet sugar practically had nothing to do with the price at which that 
sugar was sold? 

Mr. Lowry: I said it was a very small item in the cost of production. 

Mr. Fc dney: Why, does it not take labor to raise beets and to convert beets into sugar, and is 
not the same thing true of cane? 

Mr. Lowry: I said in the factory. You settled the farming end of it when you put beets on 

the lo-per cent, basis. You admitted beets as a farmer's product needed a protection of only lo per cent., 

and I object only to the factory receiving over 70 per cent, protection as it does under the present rate. 

Mr. Fordney: Which “you” are you speaking of now? 

Mr. Lowry; I speak of “you” as yourself and the party you represent, the Republican Party. On 
this matter you personally urged that. I am not sure about it, but you can say whether it is true or not. 

Mr. Fordney; If you knew all about it you knew that that is not so. 

Mr. Lowry: You did not- 

Mr. Fordney (interposing) : If you knew all about it you know that the rate fixed in the House 
was 25 per cent., the same as the Dingley law, on edible vegetables, and was lowered in the Senate. 

Mr. Lowry: I see. I thought perhaps you had something to do with those conferences, but it is 
immaterial. It does not make any difference. The correctness of their judgment has been proven. 

Mr. Fordney: I did. I was on the conference committee; yes, sir. Is it not true that wages both 
in the beet fields and in the sugar factories of this country are much higher than they are in Europe—in 
Germany and France, for instance? 

Mr. Lowry: That might be an argument if this was true for paying the farmer more, but the farmer 
does not get more. 

Mr. Fordney: The farmer does not get more what? 

Mr. Lowry: The farmer does not get more for his beets than the farmer in Germany does. 

Mr. Fordney: I know that you filed with the Hardwick committee, and to end this argument I 
will explain that you stated the farmer in Germany got more per ton for his beets than the farmer in this 
country got for his beets in general. You had in mind the co-operative plan- 

Mr. Lowry (interposing): No; I did not. 




“SUGAR AT A SECOND GLANCE” 


77 


Mr. Fordney: If you did not you do not know all about it? 

Mr. Lowry; Well, I will file the German statistics on the subject. 

Mr. Fordney: All right. There are German statistics in the Hardwick committee hearings, and 
the average price received for beets by the German farmer during the period 1905-1911 was $4.45 per 
ton- 

Mr. Lowry: Oh, no; or that may be the case where the farmer sold his beets for $4.45 per ton and 
afterwards got something on the co-operative basis. 

Mr. Fordney: Wait a minute, and let me finish- 

Mr. Lowry: We do not have to argue on that; here are the statistics. 

The Chairman: Just file those statistics. 

Mr. Lowry; I also have statistics showing the prices in 1911. In our own country our farmers 
gol $ 5-50 per ton and the German farmer $5.54. The German statistics show that the price for sugar beets 
in Germany last year averaged $6.07 per long ton. 

The Chairman: Just place those in the record with your remarks. 

Mr. Lowry; All right. So that there could be no possible question on this subject, I have secured 
and have before me the cjuarterly book of statistics of the German Empire, issued by the Imperial Bureau 
of Statistics. This you can procure by writing to any of the United States consuls in Germany. It shows 

that the average price paid the farmer for sugar beets in Germany for the years 1909-10 was $5.29 per 

long ton; for 1910-11, $ 5 - 44 ; 1911-12, $6.07. F. O. Licht, the recognized sugar statistician in Europe, ad¬ 
vises me that “conditions in other European beet-sugar countries did not differ much from those in Ger¬ 
many,” and states that “we might add for your information that the beet growers in Europe receive other 
returns for their beets besides cash, viz.; they are furnished with beet seed free of charge” (in the United 
States the farmer buys his beet seed from the factory) “they receive allowances for freight and get 
40 to 60 per cent, of the pulp returned to them without charge.” In the United States no pulp is returned 
to the farmer without charge, but this by-product of the factories is sold to the farmer and nets the fac¬ 
tory a very nice return. I would call your attention to the fact that our own Department of Agriculture 
in their annual report estimates the average value of sugar beets to the farmer in the United States for 
1911-12 at $5.50 per short ton. As the beet-sugar factories in the United States may tell you that they are 
now paying much more for their sugar beets than formerly, I would call your attention to the fact that 
the sugar content of the beets in the United States is greater than it formerly was, and also to the fact that 
prices for sugar beets in Germany have also advanced. According to the German statistics the average 
price in Germany for 1900 was $4.76 per long ton, by which it will be noted that the average for the 1912 
crop was $1.31 over the price paid in 1900, showing a greater advance than in the United States. 

Mr. Fordney: Is it not true that filed with the Hardwick committee there were statistics, furnished 

by the German Government, for a period of 10 years, as I remember, but at any rate for 8 or 10 years, show¬ 
ing that the average price paid by the factories in Germany was $4.45 ; and were there not similar statis¬ 
tics as to France, showing the French factories paid $4.05 per ton? And except- 

Mr. Lowry: I do not know of any such statistics, but if so they were wrong. 

Mr. Fordney: Mr. Chairman, I insist that the gentleman let me finish my question. Except where 

the farmer was a stockholder in a factory, and then he sold his beets at a given price, and when the divi¬ 
dends were paid, in order to get around payment of the corporation tax, they paid him an additional sum 
for his beets, which was, in fact, a profit on the business. That is the evidence before the Hardwick com¬ 
mittee. 

Mr. Lowry: I do not know of any such statement. 

Mr. Fordney: And in the same time in the United States the price paid for beets per ton was 
$5.50 to $6.91 per ton delivered at the factory. That is as far as I wish to go with you. 

Mr. Lowry: Mr. Chairman, how much time have we taken. These other witnesses want to be 

heard. 

The Chairman: Just one hour of your time has been consumed. Of course we have to take out 
the time consumed on cross-examination. 

Mr. Lowry: We would stay here a week at that rate. 

Mr. Fordney: By the way, Mr. Lowry, you said the capitalization of the sugar-beet factories was 
largely water? 

Mr. Lowry: I did. 





78 


“SUGAR AT A SECOND GLANCE” 


Mr. Fordney: Is there anything that has more watered stock than the concern you represent, the 
Federal Sugar Refining Co.? 

Mr. Lowry: Yes, sir; and you must bear in mind that the Federal Sugar Refining Co. is not here 
for the purpose of asking that American consumers of sugar be taxed so that it may earn dividends on 
any of its stock. That is not the case as to the beet-sugar companies. 

Mr. Fordney: Wait a minute there. You are here attacking the sugar-beet industry, to ask that 
they be not protected to earn dividends on large blocks of watered stock, as you say. Your testimoii}' 
before the Hardwick committee was that you had some $3,200,000 paid in, out of a capital of $10,000,000? 

Mr. Lowry: What is the purpose of that line of questioning? 

Mr. Fordney: I am trying to show that the beet-sugar men could not be more greatly watered 
than your concern is admitted to be. 

Mr. Lowry: What has that to do with the tariff? 

Mr. Fordney: That is what I say, but why did you mention it if it does not have anything to do 
with the tariff. You made the point. 

Mr. Lowry: It has a great deal to do in tlie beet-sugar man’s case. He is asking for the privilege 
of taxing the American consumer for his special benefit, so that he may pay dividends on this excessive 
capitalization. The Federal Sugar Refining Co. is not. They come to you frankly and say that they arc 
willing to work without any protection and meet non-bounty-fed competition from anywhere in the world. 
Isn’t that it? 

I 

Mr. Fordney: I am not the witness—you are. 

Mr. Lowry: I do not know about that. 

Mr. Fordney: Can you state a single instance where tliere is more watered stock in the beet-sugar 
industry than you testified there was in your concern? If so, I would like to have you do it. Two 
thirds of your stock is water. 

Mr. Lowry: Right here I will file a statement showing the capitalization and daily slicing capacity 
of the various beet-sugar factories in the country. I call attention to the fact that the cost of erecting a 
beet-sugar factory is based on $1,000 per ton of daily slicing capacity. 

Note :—Statement referred to above will be found on Page 39. 

Mr. Fordney: You said the duty you recommend on sugar is higher than the duty collected by 
foreign countries generally? 

Mr. Lowry: Yes. 

Mr. Fordney: The duty you recommend? 

Mr. Lowry: The duty that gives a certain bounty- 

Mr. Fordney (interposing) : Let me get this right. I understood you to say that the duty you 
would recommend be placed on sugar, which is a reduction, is a higher rate than that collected by lots of 
foreign countries on imported sugar? 

Mr. Lowry: That “collected” is higher than the “protective” rate. It is a favorite trick of the sugar 
growers and sugar men asking for protection down here. They add the consumption tax and the import 
tax together and then say this import tax of other countries as compared with our own is higher. 

Mr. Fordney: Mr. Lowry—- 

Mr. Lowry: If I might finish. For example, the import tariff in Germany is 47 cents on raw sugar 
and 52 cents on refined. The consumption tax in Germany is $1.50. 

Mr. Fordney: On what? 

IMr. Lowry: On all sugars. 

Mr. Fordney: On domestic and imported? 

Mr. Lowry: Yes; so that on foreign sugars imported at 47 cents add $1.50, or a total of $1.97. 
But the domestic sugars must also pay the $1.50 tax, so that the protective rate is only a rate of 47 cents; 
and that was the rate arrived at by the Brussels convention as a proper protective rate. 

Mr. Shackleford : There is a difference between the consumption tax and the import tax, and both 

apply? 

Mr. Lowry: Yes, sir. 

Mr. Fordney: Does domestic sugar produced in Germany pay a tax? 

Mr. Lowry: They pay the consumption tax. . 




“SUGAR AT A SECOND GLANCE” 


79 


Mr. Fordney: All sugar pays the consumption tax? 

Mr. Lowry: Yes, sir. 

Mr. Fordney: Whether domestic or imported? 

Mr. Lowry: Yes, sir. 

Mr. Fordney: That is your opinion? 

Mr. Lowry: Yes, sir; that is a fact. 

Mr. Fordney: The protection is 53 cents and not $1.98? 

Mr. Lowry: Fifty-two cents on refined and 47 cents on raw. 

Mr. Fordney: All right. 

TABLE PAGE 63; SUGAR IN EUROPE AND THE UNITED STATES. 

This table is replete with errors, inaccuracies and misrepresentations. 

In the first place, it is subject to the criticism that it contains rather a hybrid collection of statis¬ 
tics. Beet sugar production is given for the year 1910-1911, whereas, statistics for the year 1911-1912 were 
entirely available. Statistics for sugar imports, exports and consumption are given from August 31, 1910, 
to September I, 1911, and Retail Prices in Europe are quoted for July, 1911; while an average retail price 
in the United States is attempted to be arrived at by taking an arl)itrary wholesale price of 4.90 per lb. to 
which is added .79c as the alleged cost of sale and distril)ution in New York for the period between 1890 
and 1907. Such a confused array of statistics seems extraordinary in the light of the fact that Mr. Palmer 
announces that they were compiled in July, 1912. 

As for the statistics themselves. The import and excise taxes are combined instead of given sepa¬ 
rately. The object of this is apparently to create the impression that the sum of the two taxes is the 
rate of protection accorded to the domestic industry abroad instead of merely the import tax which in all 
cases measures the degree of protection. Both domestic and imported sugars must respond to the payment of 
the excise or consumption tax. We submit herewith a table showing the amount of the import and excise taxes 
separately in the principal countries abroad so that the degree of protection accorded may be more readily 
understood. 

IMPORT AND INTERNAL REVENUE TAXES LEVIED UPON SUGAR IN EUROPEAN 



COUNTRIES. 





Internal 

Total 


Import 

Revenue 

Both 


Tax 

Tax 

Taxes. 


per Pound. 

per Pound. 

per Pound 

Austria-Hungary .. 


3 - 50 C 

4.02c 

Belgium . 

. 5 ^^' 

1 - 75*2 

2.27c 

Denmark. 

. 1.22c 

.49c 

1.71c 

France . 

. 5 * 2 ^ 

^• 37*2 

2.89c 

Germany . 


1.51 c 

2.03 c 

Holland . 


4.92c 

4.92c 

Italy. 


6.23c 

8.67c 

Russia . 

.. 6.06c 

2.50c 

8.56c 

Spain . 

. 3 - 94 C 

3.06c 

7.00c 

United Kingdom. 

..40c 


.40c 


The import taxes alone represent the protection accorded domestic production. All sugars, DOMESTIC 
as well as IMPORTED, must respond to the payment of INTERNAL REVENUE TAXES. 

While every civilized nation may levy a tax upon sugar, it is levied mainly for the purposes of 
revenue, and from a revenue instead of a protection standpoint. THE UNITED STATES IS THE ONLY 
COUNTRY THAT EOR REVENUE PURPOSES LEAVES ITS DOMESTIC PRODUCTION UN¬ 
TAXED. 

The import taxes of 40c per 100 pounds in England, 79c per 100 pounds in Switzerland, and 12J0 ad 














8 o 


“SUGAR AT A SECOND GLANCE” 


\ aloreni, in Turkey, may properly l)e said to be levied for revenue purposes, as these countries import all 
of the sugar they ccmsume, and produce none; hence these last import taxes reach all sugar consumed. 

Prior to the Boer War, England imposed no tax of any kind on sugar, and the price was at times 
below 3c. per pound, and the per capita consumption no pounds per annum. Owing to the necessity of 
revenue growing out of the expense of this war, she first placed a tax of ic per pound upon the imports of 
sugar, which was reduced to the present .40c per pound, and she is anxious to dispense with the tax 
entirely, on account of the dissatisfaction of her consumers, who have been accustomed to a lower price 
than the present retail price of 4c per pound. The methods of taxation of sugar adopted in various Euro¬ 
pean countries, illustrates that the taxes are scientifically levied for revenue purposes, while in the United 
States only import duties are imposed, primarily as a protection, and only incidentally as a revenue tax. 
This is unscientific, inasmuch as this form of taxation reaches less than half of the sugar we consume, 
though the sugar itself costs us more than twice the amount of the $53,000,000 annually collected in revenue 
as the domestic and tarifif-fax'ored sugar interests take advantage of the tax imposed upon the duty-paying 
imported sugars, to raise their price to the full extent of the duties imposed. If we changed our form of taxa¬ 
tion, and imposed a tax of 62c per 100 pounds upon refined, 60c per 100 pounds upon 96 degree raw su¬ 
gars, and a Cuban rate of 48c per 100 pounds, we would raise $20,000,000 in revenue annually, if more 
revenue were recpiired, we could add a consumption tax of 25c per 100 pounds, and raise another $2n,000,000 
per annum, which would be imposing upon sugar about all the burdens of taxation that it should be call¬ 
ed upon to bear. An internal revenue or consumption tax of 65c per 100 pounds in the United States, would 
raise a revenue ecpial in amount to that which we now derive from imposing an import or protective rate of 
1.9OC upon Refined, 1.685c upon duty-paying 96 degree test raw sugars, and 1.348c per pound upon 96 de¬ 
gree test Cuban sugars, and has the added advantage that it would increase the revenue with the increase in 
consumption; whereas under the present method of taxation, the revenue derived from sugar in 1907, was 

$62,000,000, as against $52,000,000 in 1911. and this decrease will continue to be apparent, as domestic and tariff- 

favored production increases. Did we raise our revenue in accordance with the import and consumption tax 
basis of Germany, it would amount to approximately $140,000,000 per annum ; if Belgium $160,000,000, if 
France $220,000,000, Austria-Hungary $300,000,000. In raising this amount of revenue per annum in these 
various forms, if we adopted the German rate, our price would be loc per hundred less than now; if, in ac¬ 
cordance with the Belgian rate, it would be 15c per 100 lbs. more; with French 90c per 100 lbs. more, 

and the AustriaiirHungarian but $1.90 per 100 lbs. more. But the reason for taxing sugars abroad, do not 
exist here. They make use of these taxes for the purpose of raising revenue to support their large standing 
armies, and defray the expenses incidental to the cost of royalty. The import and consumption tax rate for 
the United States proposed above, would result in reducing the price of sugar to the consumer about one 
cent per pound, while raising $40,000,000 per annum. But with the Income Tax, by which it is expected 
to raise an annual revenue of $150,000,000, the necessity of imposing any tax upon this necessary of life will 
disappear. Aside from the fact that our present tax is unscientifically imposed, it is a burden upon the 
poorer people, and should be shifted from their backs to the shoulders of the well-to-do and prosperous, through 
the medium of such a tax. 




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